Bull run is getting bigger! There are 70 million bulls in the market now, says Raamdeo Agrawal
ETMarkets.com
Synopsis
“In 2007-2008, there were just about 10 million bulls. In 2012-2013, there were 20 million. By 2021, there are 70 million bulls! In the next three years, it will be anything between 150 and 200 million Indian bulls.”
By ET Now
After a big run we will have a consolidation or maybe some correction for some time. It is not necessary that from one Diwali to next, if one makes 50%, it will be another 20-25% in next Diwali. That is not a given, says Raamdeo Agrawal, Chairman, Motilal Oswal Financial Services.
After a year of re-rating, solid price action, earnings comeback and recovery, what is in store for us? Bulls are back but are they here to stay?
Not only are bulls back, I think many more bulls are coming in. That is the biggest change this time. It is not the same number of bulls who are going to play in the market. In 2007-2008, there were just about 10 million bulls. In 2012-2013, there were 20 million. By 2021, there are 70 million bulls! I am talking about the Indian bulls and my sense is that in the next three years, it will be anything between 150 and 200 million bulls. So you can decide how big the bull run is going to be here!
Bull runs ultimately are a reflection of the economy which gets captured in earnings. So while earnings recovery and earnings trajectory are headed in the right direction, valuations are way above the historical averages. If the inflationary environment comes back and interest rates go higher, value stocks will start coming down.
It is quite possible that after a big run we will have a consolidation or maybe some correction for some time. It is not necessary that from one Diwali to other Diwali, you made 50% and so next Diwali has to be another 20-25%. That is not a given. Maybe it is flat, maybe it is a little over. There are so many IPOs.
Incrementally there will be that virtuous circle from stock market to the real economy, real economy to demand revival and things like that. So, the market can take a breather and that will be very good as other people will come in and corporates get the money. Some people are getting more than what they should get and valuations are quite stretched. So let the market stop here in terms of run and let the primary market take what it can take and let the valuations there become reasonable and let the earnings also catch up. But the bull run is not about 6 months, 12 months, 18 months. My sense is this run is going to be a much longer run. If we do not get too high too quickly, then this run has steam for a much longer run.
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After a year of re-rating, solid price action, earnings comeback and recovery, what is in store for us? Bulls are back but are they here to stay?
Not only are bulls back, I think many more bulls are coming in. That is the biggest change this time. It is not the same number of bulls who are going to play in the market. In 2007-2008, there were just about 10 million bulls. In 2012-2013, there were 20 million. By 2021, there are 70 million bulls! I am talking about the Indian bulls and my sense is that in the next three years, it will be anything between 150 and 200 million bulls. So you can decide how big the bull run is going to be here!
Bull runs ultimately are a reflection of the economy which gets captured in earnings. So while earnings recovery and earnings trajectory are headed in the right direction, valuations are way above the historical averages. If the inflationary environment comes back and interest rates go higher, value stocks will start coming down.
It is quite possible that after a big run we will have a consolidation or maybe some correction for some time. It is not necessary that from one Diwali to other Diwali, you made 50% and so next Diwali has to be another 20-25%. That is not a given. Maybe it is flat, maybe it is a little over. There are so many IPOs.
Incrementally there will be that virtuous circle from stock market to the real economy, real economy to demand revival and things like that. So, the market can take a breather and that will be very good as other people will come in and corporates get the money. Some people are getting more than what they should get and valuations are quite stretched. So let the market stop here in terms of run and let the primary market take what it can take and let the valuations there become reasonable and let the earnings also catch up. But the bull run is not about 6 months, 12 months, 18 months. My sense is this run is going to be a much longer run. If we do not get too high too quickly, then this run has steam for a much longer run.
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