Hi All,
fyi
Arjun Divecha:
India is our least favorite market, because of valuations. India is one of the best long-term stories I know of. The question is, What are you paying for it and what are the risks?
I hate to pay 20 times earnings for anything. I also acknowledge that there are certain things that are worth paying 20 times earnings for, and India may be just that, but I'm not willing to make that bet. Valuations are high. A number of property markets in India have literally gone up five to 10 times in the last two to three years.
There has been a huge speculative boom.
There is a land developer called DLF which is going to go public in the next few months, and they will have a market cap of $20 billion. Think about it: A company you have never heard of, even I had never heard of it three years ago, is going to go public with a market cap of $20 billion.
What is driving this? Basically, it's because so much of the land they own has appreciated so much. The founder of the company, who will own about 80% of the company after the IPO, will become one of the five richest people in the world. There is something wrong with that. You have got to worry about the excesses.
China is growing at 10% but they've got the infrastructure to support it. India growing at 8% is beyond its speed limit in that it doesn't have the financial and physical infrastructure to support its growth. That will lead to inflation, and that will likely lead to the central bank moving to fight inflation aggressively, and that won't be good for the markets.
To add to the above - Inflation is also at a 2 yr high of 6.58%.
Suggest investors to book some profits and avoid high exposures. If policies of the RBI is not distinctive, this could bring about a downturn - by downturn I dont mean a correction.
Advice caution......
Thanks and Regards
Supratik
