The Indian Markets have performed strongly over the past 20 years and can potentially deliver a 16-20 percent return over the coming 3-5 years, says Vikas Khemani, founder, Carnelian Asset Advisors LLP.
The Nifty 50 set a new all-time high of 19,336.10 during early trading hours on July 3.
In an interview with Moneycontrol, Khemani called India a “financially prudent country” with a good current account and fiscal deficit, and strong micros as well as macros. Khemani believes that the Indian economy is currently riding on a corporate profit cycle with sectoral indices recovering growth.
Looking back on the past 20 years performance of the Nifty, Khemani stated that “In 2003, the Nifty was at 800 points. Today, it is trading around 19000 points. This shows that the market has grown over 22-23 times over the past 20 years.”
“We are in the middle of the corporate profit cycle” said Khemani. He noted that we are currently devoting 4-4.5 percent of corporate profit towards GDP, while there is a strong possibility that in the near future we kick out at nearly 7-8 percent.
Amidst mixed views displayed by analysts regarding the continuation of the current run-up, Khemani is bullish on the Indian markets and foresees the next 3-5 years to remain robust for the Indian equities.
The Indian market has successfully survived the UPA 1, UPA 2, global financial crisis, CG scam, coal scam, ILFS scam, demonetization, covid and a lot more, he noted. He believes that the power of the Indian economy driven by a strong demographic profile has helped the markets deliver an average 17-18 percent compound annual growth rate (CAGR) return over the past 20 years.
Khemani stated that despite the poor performance of the manufacturing sector over the past few years, the markets today are fairly balanced with focus on domestic consumption, exports, investments, and financials.
