With the NSE barometer Nifty hovering near the psychological mark of 20,000 level, investors have been wondering whether they have missed the bus. In an exclusive conversation with BTTV for Market Masters show, top Market Guru Raamdeo Agrawal, Chairman & Co-Founder, Motilal Oswal Group, said that this concern should be the least of investor worry
According to Raamdeo Agrawal, the term 'all-time high' should be absent from investor dictionary. The index is not flirting with an 'all-time high' level for the next five years, but is at the highest level of the last few decades. "The all-time high for the next five years would be at least double of this. In the next 10 years, the all-time high would be 3x of this," he said
In the BTTV interview, Raamdeo Agrawal said, "It is like GDP. At present, the GDP stands at $3 trillion. That does not mean it won't reach $5 trillion or $7 trillion mark. We are even talking about $40-45 trillion figures in 2047. I don't know what should one do with the 'all-time high' term. I think it should be taken away from the dictionary."
Continue viewing BT Visual Story
Catch the latest business news, share market updates, expert analysis and exclusives only on BTTV.in
Sharing valuable advice with investors, Raamdeo Agrawal said that one should have patience. "The guys who have the highest patience will generate the highest alpha, given that they are riding the right horse," the market veteran said, adding, "There is research that suggests that the best-performing funds or portfolios are of those guys who are dead. The owners of companies have the maximum patience as they have no choice."
According to Raamdeo Agrawal, the $3 trillion Indian stock market should be around $9-10 trillion mark over the next 10 years, and the market is all about patience, "When the company wins, the biggest winner is the owner itself. When you bet on 10 companies, 5 will definitely disappoint you. For the five winners, you have to bring maximum patience. That is what lacking in the market today," the market guru said
Raamdeo Agrawal, who is hopeful about corporate earnings over the next 12 months, said the market delivered 13-14% return annually over the last 35-40 years and that the future is even brighter. Even if one does not assume optimistic estimates and consider the earnings growth in the next 40 years to be similar to the last 40 years, Agrawal said 12-15% returns annually are possible in the long term
Raamdeo Agrawal said a 10 times return in 10 years is decent. He said 25% return compounded annually, and would be considered a 'multibagger'. "To achieve such a return, a retail investor needs to identify companies that can deliver a 25% growth in earnings over the next decade. If the investor got his projections right, he may end up seeing 23-28% returns annually over the decade period, thanks to re-rating on the counter," the market master added
According to Raamdeo Agrawal, one has to do homework, focus on the company's earnings, make sure one understands the business of the company well, and make spreadsheets on those companies. "TCS, Wipro and Infosys were small companies in 2000 but are giants now. One has to give time not only to the company to grow but also to the market itself," he said
Raamdeo Agrawal noted that market is erratic, and no one can predict short-term movements, suggesting the futility of such an exercise. He also said that IT firms have been able to be relevant despite several disruptions in technology in the past, and that they should continue to do so, even in the artificial intelligence (AI) era. The market veteran sees Indian IT firms being darlings of corporations globally as soon as AI adoption picks pace in the next 3-4 years
"Indian IT firms have been able to stay relevant in every wave of technology change -- whether it is ERP, Dotcomm, or digital. I am quite sure that when AI is in full bloom in the next 3-4 years, Indian IT firms would be the darlings of corporations across the world. It would be an interesting time. But it is too early to name a company," Raamdeo Agrawal said