Yes, I understand what you are saying. I just think that the equity train is only picking up steam in India, and while it may slow down in a rising interest scenario, flows will continue to rise/stay strong. Therefore, it seems unlikely that it will slow down enough to keep returns low over a period of 5-10 years, unless the kind of events/scenarios that I fear play out.
Anyway, that is my perspective. You may well be right that equity interest can go down in a sustained high interest environment leading to lower liquidity in the market and therefore lower returns.
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