On 25th February, when the Nifty slumped to a low of 6970, we should have been on Dalal Street, behaving like Dare Devils and buying stocks left, right and center. Unfortunately, we behaved like frightened rabbits and hid under our beds. Since then, the Nifty has staged a smart recovery.
The reason for our deplorable attitude is because the events of the past few weeks, coupled with the rabble rousing of doomsday prophets and the anti-NAMO rhetoric, filled our tender minds with dread about the prospects of the India growth story.
In situations like this, the best thing to do is to step back and to look at the situation from the perspective of a foreigner. Foreigners have no attachment to the Country and are not swayed by petty controversies. They are objective and always look at the big picture. Also, because foreigners invest in multiple countries, they are able to bear in mind the relative advantages and disadvantages of each Country. So, India, despite all of its problems, may be a good investment, if the other Countries are in a worse position.
Katie Koch, the Managing Director of Goldman Sachs is immensely qualified to opine on India and Indian stocks owing to her rich experience in the territory.
In her latest interview, Katie said that there are reasons to be “hugely optimistic” about India. “We are very bullish on the prospects of India”, she added and gave cogent reasons in support of her hypothesis:
(i) India is presently growing at 7.5% and has the capability of growing at 9 to 10%. There is no other Country in the World growing at such rapid pace;
(ii) Inflation is tapering down. The RBI Governor made it clear that the monetary policy can be accommodative and interest rates lowered, which is very good for equities;
(iii) India’s demographics are very attractive. 70% of the population is below the age of 30 years. Demographics are highly co-related to long-term growth prospects;
(iv) India is on the ‘precipice’ of an infrastructure boom. Already, there are 30km of roads being laid everyday. The telecom sector is also booming.
Katie emphasized that the record outflows from Indian stocks (which led to the steep crash) is the result of a “risk off” attitude amongst foreign investors and has created a unique opportunity for people “to be bold” and to add to their positions in Indian stocks.
Katie also pointed out that there was a “lot of optimism” built into the Government and that there has been some disappointment. However, there is “real progress” on the ground level and there is confidence that the Government will deliver on the promised reforms, she added.
“If you are willing to take a long-term perspective, the investment implications in India’s equity market are positive” Katie Koch said with immense confidence in her voice!