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'India in a 10-year bull phase'
May 19, 2006
Chairman of DSP Merrill Lynch Hemendra Kothari believes that the correction was a natural one, which came in with the decline in other markets.
Kothari expects volatility in the market to continue. Kothari also says that though valuations are stretched, growth rates are higher in the Indian market.
He further adds that he is bullish on the Indian economy and that India is in a ten year bull phase.
Excerpts from CNBC-TV18's exclusive interview with Hemendra Kothari:
There is a correction, which was a natural thing to happen, coupled with what happened in other markets. In the last two weeks, other markets have fallen 5-7 per cent. So we are not a unique market nor are we an insulated market like what we were before.
In BRIC (Brazil, Russia, India, China) countries too, the markets have fallen and we also have gone along with that, although we are 20 per cent higher from the beginning of the year market wise.
I feel that this kind of volatility may remain and we need to watch what is happening to the interest rate in dollars as there is a fear that interest rates may go up. Interest rates have a strong bearing on the equity markets around the world and we obviously may not be an exception to that.
What are your clients and FIIs telling you at this point of time and are they finding Indian markets overstretched?
May be the market in India moved fast and the valuations were stretched but at the same time, growth is higher than other markets on the profitability side. So one cannot compare and it doesn't mean that just because our valuation has gone up, the growth isn't there.
Although one may find different behaviours of different investors, people who have taken positions as operators have no choice sometimes but to square up their positions when the market moves this way.
This week has been a volatile week for the markets, do you expect this kind of volatility to continue?
All markets stabilise at a particular time but what we saw in metals; as to the rise that had taken place there and the fall that took place had never happened before. I think this is a world phenomenon and India is a part of that. So I would say don't look at the market because fundamentally our economy is good and one has to see the economic story of the country and not only the market.
Would you say you are bullish on the Indian economy?
Absolutely, and I think we are seeing a bull phase of ten years and not 1-2 year bull phase.
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