India’s stock market is fairly valued, says Motilal Oswal Financial Services' Raamdeo Agrawal
Raamdeo Agrawal on the right approach to trading derivatives and why a market turnaround might be round the corner
- Jul 25, 2025,
- Updated Jul 25, 2025 7:38 PM IST
In a wide-ranging interview conducted soon after the Securities and Exchange Board of India's (Sebi’s) order on Jane Street, veteran investor and Chairman and Co-founder of Motilal Oswal Financial Services, Raamdeo Agrawal, says stock trading might work for some and not for others. Edited excerpts:
SZ: Many retail investors are seeking advice after the Jane Capital case where the firm is accused of manipulating markets and making massive unlawful gains. What are the lessons from this as far as derivatives trading is concerned?
RA: In trading, very few people make money. But the guys who are masters, those who have proficiency in handling a lot of data, use a lot of computers and have the gut feeling for trading have done well. What is important is your experience. If you have been making money in the last two-three years, who can stop you? If there are one billion guys in the market, there are one billion ways of making money. With all these actions (Sebi’s Rs 4,843 crore fine on Jane Street and steps to check market manipulation), there will be some changes in market movement, and the probability of you making money might go up a little bit.
SZ: We are seeing continuing global uncertainty. Amid this, domestic growth seems to be strong. Where are our markets headed over the medium and long term?
RA: The economy is a bit slow. You are seeing that in the GST numbers as well. But the regulators have moved. At least the RBI has acted much stronger than expected in the quantum of rate cut as well as the pace of CRR reduction. The government’s attention is clearly focused on the fact that the slowdown has gone too far and it needs to energise the real economy. But it takes four-five quarters to stop the party and another four-five to bring it back in action. After the monsoon comes the busy season with Diwali, Dussehra and Christmas. I think we will feel the difference with last year at that point of time. Hopefully, fiscal and monetary benefits will perk up consumer demand. That’s the expectation. But as of now, I have just come from a meeting where the management said it’s very dull, particularly the automotive side, which is a benchmark for a lot of consumer demand. They are saying the current year will be plus/minus 5%, which is not enough for an economy growing at 7%. The number should be more like 10%, 12%, 15%. Hopefully, it will come back in the second half.
SZ: What index levels are you expecting for Sensex and Nifty by Dussehra-Diwali?
RA: I wouldn’t know about the next five months, seven months, etc. But I’ve been in the market for the last 45 years and have seen that it doubles every five-six years. There is no reason to believe this will not be repeated. The economy has momentum. There is enough scope for corporate profits to improve. Multiples are a little high but not backbreaking. We are also going through a capital market revolution. I think there are a lot of positives. The economy just needs some momentum. When you buy for five years, one to one-and-a-half years will be bad, and three to three-and-a-half years will be good. Right now, the real economy is moving at less-than-average speed. We might see a massive acceleration in the second half of this year or maybe next year. But markets are smart. The moment you see the first flush of strengthening consumer demand, say, in two months or three months, markets will start moving up much ahead of that.
SZ: Are Indian equities running ahead of fundamentals right now?
RA: Is the market cheap? No. It is fairly valued. I am talking about the broad market. But there are always industries, segments and stocks which are underpriced even in fairly valued markets. Also, some stocks are overvalued. That’s the character of the market. You need to work a lot more to find a good company at a reasonable price. Earlier, you could find a good stock in, say, five days. Now, if you work hard for a month, you might get one.
But it is an extremely liquid market. The economy is looking up. The consumer side might be a little weaker but there are a lot of other segments of the economy which are doing well. So, you have to align your portfolio with the growth frontier of the economy. The markets are fantastic, though a little richly valued, but I do not see any major crisis.
SZ: What are the two, three themes that could be big wealth creators in the next 5-10 years?
RA: You need to buy a terrific company. The themes are overstated. Focus on the companies you buy, because entrepreneurs are magical guys, and can make money out of nothing. You need a good set of entrepreneurs and reasonably good businesses, not outstanding, but with a lot of growth. If the industry is growing at 15-17%, which are the companies which can grow at 20% or 25%? And a whole lot of new companies are coming up whose story is not fully known. You’ll get a lot of companies that are mispriced even while doing IPOs as there’s no benchmark for valuing them due to new management or new business model. Your unique understanding of those companies will allow you to buy them for the long term.
This country will produce a capital market which will be unbelievable. We are sitting at Rs 460-470 lakh crore market cap. It is doubling every four years. You will have an almost Rs 1,000 lakh crore marketplace by 2030-32. All market participants, broking, asset management, are monopolistic and keep growing. I am staying with these for 20, 30, 40 years. The guys who are coming from behind, the new energetic entrepreneurs with AI and digital capability, can surprise. Look at Zerodha. You’ll get players in other segments who will dwarf even the success of Zerodha.
SZ: Many global CEOs in the United States have for the first time said that AI will impact their workforce numbers. What is your sense of the impact of AI on Indian firms?
RA: AI will positively impact everybody except services companies. These companies will have to rediscover themselves, retrain their workforce and redesign their business model. I think there will be some, maybe a one-two year breathing space, when they will re-emerge as AI-powered companies.
I don’t see anybody spending less on tech but who will win, whether infrastructure providers, chip providers or services guys, is not clear. But in real businesses, the impact is massive. I am just coming from the tech exhibition of our company. They are saying we can do double or triple the work we are doing today with the same or lesser number of people. So, clearly, headcount freeze will happen. My sense is that the tech cost itself might stabilise. The value delivered by the same tech spending will be far higher. So, it is a great time for businesses.
SZ: Is it harder to find value now that there is so much liquidity in the market?
RA: Yes, it is a rich market, so you must work harder. You must have your framework clear. You used to look at ten companies and shortlist five. Now, it might be three. And you have to work a little harder to get that one company which you want to buy. But it’s a very exciting time. There are a lot of new sectors. Like energy transition. Wind companies, solar companies, they were dead two- three years back. Today it’s the most throbbing sector. All capital market companies, NSDL, CDSL, broking companies, they were all growing at 10-12%. Today they’re going at 25-30%. You can’t be static in the market. It is very rapidly changing. You have to go to the growth frontier and examine whether you have the guts to take a dip into those kinds of sectors and companies.
SZ: How does one stay invested when one see quality stocks in the portfolio also correcting sharply?
RA: You have to look at the return of the portfolio. Don’t bother too much about returns from individual shares. If the company is doing well, but the stock price is down, I don’t think there is a reason to panic and sell. But people get too focused on individual stocks rather than the entire portfolio.
Sz: Buy right, sit tight. Does that advice change?
RA: Buy right, sit tight, works in India in terms of allocation. Say you have a Rs 100 crore portfolio, and you want to be at 60% equity and 40% debt. Do whatever you want with the debt, but in equity, do not go below 60%. And then buy the best possible company at a given point of time. But do not mess around with the 60% allocation to equity and say “I am 30% in cash because the markets look risky.” That’s when you get shafted.
@szarabi
In a wide-ranging interview conducted soon after the Securities and Exchange Board of India's (Sebi’s) order on Jane Street, veteran investor and Chairman and Co-founder of Motilal Oswal Financial Services, Raamdeo Agrawal, says stock trading might work for some and not for others. Edited excerpts:
SZ: Many retail investors are seeking advice after the Jane Capital case where the firm is accused of manipulating markets and making massive unlawful gains. What are the lessons from this as far as derivatives trading is concerned?
RA: In trading, very few people make money. But the guys who are masters, those who have proficiency in handling a lot of data, use a lot of computers and have the gut feeling for trading have done well. What is important is your experience. If you have been making money in the last two-three years, who can stop you? If there are one billion guys in the market, there are one billion ways of making money. With all these actions (Sebi’s Rs 4,843 crore fine on Jane Street and steps to check market manipulation), there will be some changes in market movement, and the probability of you making money might go up a little bit.
SZ: We are seeing continuing global uncertainty. Amid this, domestic growth seems to be strong. Where are our markets headed over the medium and long term?
RA: The economy is a bit slow. You are seeing that in the GST numbers as well. But the regulators have moved. At least the RBI has acted much stronger than expected in the quantum of rate cut as well as the pace of CRR reduction. The government’s attention is clearly focused on the fact that the slowdown has gone too far and it needs to energise the real economy. But it takes four-five quarters to stop the party and another four-five to bring it back in action. After the monsoon comes the busy season with Diwali, Dussehra and Christmas. I think we will feel the difference with last year at that point of time. Hopefully, fiscal and monetary benefits will perk up consumer demand. That’s the expectation. But as of now, I have just come from a meeting where the management said it’s very dull, particularly the automotive side, which is a benchmark for a lot of consumer demand. They are saying the current year will be plus/minus 5%, which is not enough for an economy growing at 7%. The number should be more like 10%, 12%, 15%. Hopefully, it will come back in the second half.
SZ: What index levels are you expecting for Sensex and Nifty by Dussehra-Diwali?
RA: I wouldn’t know about the next five months, seven months, etc. But I’ve been in the market for the last 45 years and have seen that it doubles every five-six years. There is no reason to believe this will not be repeated. The economy has momentum. There is enough scope for corporate profits to improve. Multiples are a little high but not backbreaking. We are also going through a capital market revolution. I think there are a lot of positives. The economy just needs some momentum. When you buy for five years, one to one-and-a-half years will be bad, and three to three-and-a-half years will be good. Right now, the real economy is moving at less-than-average speed. We might see a massive acceleration in the second half of this year or maybe next year. But markets are smart. The moment you see the first flush of strengthening consumer demand, say, in two months or three months, markets will start moving up much ahead of that.
SZ: Are Indian equities running ahead of fundamentals right now?
RA: Is the market cheap? No. It is fairly valued. I am talking about the broad market. But there are always industries, segments and stocks which are underpriced even in fairly valued markets. Also, some stocks are overvalued. That’s the character of the market. You need to work a lot more to find a good company at a reasonable price. Earlier, you could find a good stock in, say, five days. Now, if you work hard for a month, you might get one.
But it is an extremely liquid market. The economy is looking up. The consumer side might be a little weaker but there are a lot of other segments of the economy which are doing well. So, you have to align your portfolio with the growth frontier of the economy. The markets are fantastic, though a little richly valued, but I do not see any major crisis.
SZ: What are the two, three themes that could be big wealth creators in the next 5-10 years?
RA: You need to buy a terrific company. The themes are overstated. Focus on the companies you buy, because entrepreneurs are magical guys, and can make money out of nothing. You need a good set of entrepreneurs and reasonably good businesses, not outstanding, but with a lot of growth. If the industry is growing at 15-17%, which are the companies which can grow at 20% or 25%? And a whole lot of new companies are coming up whose story is not fully known. You’ll get a lot of companies that are mispriced even while doing IPOs as there’s no benchmark for valuing them due to new management or new business model. Your unique understanding of those companies will allow you to buy them for the long term.
This country will produce a capital market which will be unbelievable. We are sitting at Rs 460-470 lakh crore market cap. It is doubling every four years. You will have an almost Rs 1,000 lakh crore marketplace by 2030-32. All market participants, broking, asset management, are monopolistic and keep growing. I am staying with these for 20, 30, 40 years. The guys who are coming from behind, the new energetic entrepreneurs with AI and digital capability, can surprise. Look at Zerodha. You’ll get players in other segments who will dwarf even the success of Zerodha.
SZ: Many global CEOs in the United States have for the first time said that AI will impact their workforce numbers. What is your sense of the impact of AI on Indian firms?
RA: AI will positively impact everybody except services companies. These companies will have to rediscover themselves, retrain their workforce and redesign their business model. I think there will be some, maybe a one-two year breathing space, when they will re-emerge as AI-powered companies.
I don’t see anybody spending less on tech but who will win, whether infrastructure providers, chip providers or services guys, is not clear. But in real businesses, the impact is massive. I am just coming from the tech exhibition of our company. They are saying we can do double or triple the work we are doing today with the same or lesser number of people. So, clearly, headcount freeze will happen. My sense is that the tech cost itself might stabilise. The value delivered by the same tech spending will be far higher. So, it is a great time for businesses.
SZ: Is it harder to find value now that there is so much liquidity in the market?
RA: Yes, it is a rich market, so you must work harder. You must have your framework clear. You used to look at ten companies and shortlist five. Now, it might be three. And you have to work a little harder to get that one company which you want to buy. But it’s a very exciting time. There are a lot of new sectors. Like energy transition. Wind companies, solar companies, they were dead two- three years back. Today it’s the most throbbing sector. All capital market companies, NSDL, CDSL, broking companies, they were all growing at 10-12%. Today they’re going at 25-30%. You can’t be static in the market. It is very rapidly changing. You have to go to the growth frontier and examine whether you have the guts to take a dip into those kinds of sectors and companies.
SZ: How does one stay invested when one see quality stocks in the portfolio also correcting sharply?
RA: You have to look at the return of the portfolio. Don’t bother too much about returns from individual shares. If the company is doing well, but the stock price is down, I don’t think there is a reason to panic and sell. But people get too focused on individual stocks rather than the entire portfolio.
Sz: Buy right, sit tight. Does that advice change?
RA: Buy right, sit tight, works in India in terms of allocation. Say you have a Rs 100 crore portfolio, and you want to be at 60% equity and 40% debt. Do whatever you want with the debt, but in equity, do not go below 60%. And then buy the best possible company at a given point of time. But do not mess around with the 60% allocation to equity and say “I am 30% in cash because the markets look risky.” That’s when you get shafted.
@szarabi