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Friday, June 18, 2010

India - Ready for Multi Decade Bull Market

Indian stock market for investors could be a multi bagger. A 20-bagger!

Yes, that's what the US stock markets returned between 1981 and 1998, believed to be the best period ever for the US stock markets. Similarly, between 1978 and 1989, the Japanese stock market turned out to be a near 8-bagger. Please bear in mind that these were returns from the broader markets and there were many stocks in these countries that turned out to be 30, 40 and even 50 baggers. Clearly, if one could identify a multi decade bull market early, there could be no better place than equities.

So, is there any such bull market taking shape anywhere in the world right now? If one were to listen to Rakesh Jhunjhunwala, one of India's most successful investors, there is a multi decade bull market making its presence felt right here in India. "India is on the verge of unprecedented multi decade growth. Choice of asset class will decide the return. I have allocated 100 per cent of my portfolio to equity asset class", Rakesh Jhunjhunwala opined at a recent seminar. He further added that investors should look for long-term growth prospects and growth-drivers of companies where they invest, rather than getting carried away by short-term apprehensions.

We completely agree with above statement and couldn't have said it better. While the Indian economy is likely to grow at strong rates well into the future, it is only those companies that constantly churn out products that meet the needs of India's large population, and also does it profitably, will survive. Hence, investors should always be on the lookout for such small to medium size companies which are strong multibagger candidates and can provide exponential gains on investments in years to come.