On December 11, the Sensex touched 70k, though it closed a tad lower.
It is just a matter of time before the index closes above this mark and may even touch 100,000. A lot has happened over the last three years. The Nifty is up 48%, or 14% annually, and trading at its all-time high above 20,000.
The long-term annual growth of the Nifty, at 12% for the last 20 years, is one of the best that any emerging market can offer.
Indian retail investors are flocking to the market through the Systematic Investment Plan (SIP) route, the RBI has contained inflation, and the weight of India has improved in the MSCI World Index from 9% in January 2020 to 15.68%.
As of now, India is the most talked about emerging market in the world. Everything seems to be in place for this great nation — just like it was many years ago.
Ancient India, often described as Sone ki Chidiya or the “Golden Bird”, holds a timeless allure as a land of immense wealth and cultural richness. This metaphorical moniker reflects the grandeur of India's past, where it was renowned for its opulence, prosperity, and abundance. Sone ki Chidiya was aptly chosen to depict the incredible wealth and resources of the Indian subcontinent. In ancient times, India was indeed a treasure trove of valuable commodities, including gold, gems, spices, textiles, and other coveted items.
The concept of Sone ki Chidiya extends beyond just material wealth; it encompasses the golden age of Indian civilisation, marked by a rich tapestry of culture, philosophy, art, and spirituality.
Today, while India has transformed and evolved, it remains a land of tremendous diversity and cultural wealth. The legacy of its golden past endures in its traditions, festivals, and the hearts of its people, making it a unique and vibrant nation with a rich history that lives on in the modern world. However, many years of foreign invasions, plunder and systemic wealth transfer to colonial powers reduced India to a mere shadow of its once mighty self.
It took many years to rebuild what was lost, but now, finally, India is regaining its status as a globally dominant power. The post-pandemic years have demonstrated India’s resilience in the face of global turmoil.
India managed to contain inflation without much delta in policy rates, while “developed” economies’ central banks had to swing a ~500 basis point sledgehammer to tame inflation. The prudence shown by India during the pandemic, of not reducing the rates excessively, helped us remain moderate in the subsequent up-swing in rates.
Here are some key indicators:
· A key indicator of economic health, viz composite PMI, never dipped into the contractionary zone below 50 for India and remained strong while the rest of the world struggled. This is a sign of robust economic strength.
· Average monthly GST collections greater than INR1.5 lakh crore is the new normal. This used to be below INR1 lakh crore before the pandemic — another sign of sustainable economic expansion.
· The reforms of the past ~10 years will help catapult India into a major high growth cycle over the next decade
· Our growth estimates tower over the rest of the world, with a zero probability of recession over the next year. While the rest of the world is debating if there will be a recession or not, India will grow at 6%-7% y-o-y for many quarters to come.
· Despite the pressure on the rupee, India managed to maintain forex reserves at ~USD600 billion.
· India’s banking sector is at the strongest level it has ever been. Balance sheets are well capitalised and credit offtake is picking up sharply.
· India remains an FII favourite, attracting a large share of FII flows versus other emerging economies, because of its robust growth outlook, balanced fiscal and monetary situation, and political stability.
However, this is a one-sided love story. While FIIs are in love with India, India is pouring its affection on Domestic Institutional Investors (DIIs). See below how the reliance on FII flows has reduced majorly over the last ~5-10 years, led by retail and HNI participation in monthly SIPs.
We therefore saw a very limited impact of FII selling in the period between October 2021 to March 2023, versus other such instances in the past India also has a solid track record of creating “multibaggers”.
The world is witnessing the rebirth of the magnificent Sone Ki Chidiya. India’s time is here to stay, and Indian equities offer an excellent opportunity for Indian and global investors to participate in this phenomenal growth story.This is India’s time in the Sun and it will last for a long time to come.
By Lakshmi Iyer
https://economictimes.indiatimes.com/prime/money-and-markets/sone-ki-chidiya-reborn-an-ode-to-indian-markets-mount-70k-rendezvous/primearticleshow/105942083.cms
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