Why Raamdeo Agarwal believes Indian markets will double in next 5-6 years despite Modi-led NDA's less than predicted mandate

| TOI Business Desk | TIMESOFINDIA.COM | Jun 5, 2024, 13:28 IST

Stock market outlook post Lok Sabha election results: Long-term i... Read More

Stock market outlook post Lok Sabha election results: Raamdeo Agarwal, the Chairman of Motilal Oswal, believes in the importance of focusing on the fundamentals rather than getting swayed by short-term market fluctuations in equity investing.

The recent market volatility, driven by election results and exit polls, should be considered as noise, he says in a column in ET. Instead, investors should focus on the fact that the BJP remains the single largest party, and the NDA has the mandate to form the third successive government, ensuring continuity in development reforms and PM Modi's vision for India's future, he says.

According to Agarwal, India's economic fundamentals remain strong, with robust GDP growth, substantial foreign exchange reserves, low inflation, and the possibility of interest rate cuts by the RBI.

Additionally, good monsoons and positive outlooks from rating agencies contribute to the resilience of the Indian economy. These factors are expected to drive corporate earnings growth, a key driver of stock markets, he says.

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The increasing participation of retail investors in the stock market, evident from the growing number of demat accounts and rising monthly SIP flows, has helped the markets absorb significant FII selling in the recent past. FIIs may even use the current market correction as an opportunity to re-enter India, he adds.

Agarwal quotes Benjamin Graham, "In the short run, the market is a voting machine but in the long run, it is a weighing machine."

The current market reaction to the election results may lead to some short-term derating of India, but this will likely be offset by corporate earnings growth of around 15% over the next year, he believes.

Long-term investors should maintain their belief in India's solid economic fundamentals and expect the market benchmarks to double in the next 5-6 years, he says.

Raamdeo Agarwal advises new investors to follow Warren Buffett's wisdom: "It's wise for investors to be fearful when others are greedy and be greedy when others are fearful."

The current market fear, driven by fluid politics, presents an opportunity for investors to believe in India's strong economic foundation and invest with a long-term perspective, he says. “I advise you to believe in India’s solid economics and be somewhat greedy,” he concludes.

Top 10 Largest Economies In The World

Top 10 Largest Economies In The World: India is all set to become the world’s third largest economy in the coming few years. But what is India’s current ranking in the world’s top 10 economies by nominal GDP size? Where do America and China stand? Did you know that at the current level, the USA's GDP is 7 times that of India? As per the latest IMF data sourced from EY, we take a look the world’s top 10 economies and their projected GDP in the coming years: (AI image)

The United States of America or the USA leads the list of top 10 largest economies in terms of nominal GDP for the year 2023 as per IMF’s estimates. The GDP for 2023 stands at $27,357.825 billion and the expected GDP for 2024 is at $28,781.083 billion. The IMF outlook till 2029 predicts that America will continue to be the world’s largest economy, with an expected GDP of $34,950.012 billion. (AI image)

As of 2023, China’s GDP according to IMF estimates stands at $17,662.041 billion. In 2024, China’s GDP is expected to rise to $18,532.633 billion in 2024, moving to $24,842.337 billion in 2029. China is likely to maintain the tag of the world’s second largest economy. (AI image)

Germany stands at the third rank in the list of world’s largest economies with a GDP of $4,457.366 billion in 2023. In 2024, Germany’s GDP Is likely to be around $4,591.1 billion and in 2029 it will likely be near $5,358.074 billion. According to IMF estimates, Germany would lose the tag of the world’s third largest economy 2027 to India. (AI image)

Japan is the world’s fourth largest economy with a GDP of $4,212.944 billion in 2023. Japan’s nominal GDP has been declining for the last few years and by 2025 it is likely to lose the spot of the 4th largest economy to India. In 2029, Japan’s GDP is expected to be around $4,944.744 billion. (AI image)

India is the fifth largest economy in the world with a GDP of $3,572.078 billion in 2023 according to the latest IMF data. In 2024, India’s GDP is expected to be $3,937.011 billion and in 2025 it will likely become the fourth largest economy with a GDP of $4,339.83 billion. IMF estimates predict that in 2027, India will beat Germany to become the third largest world economy with a GDP of $5,287.04 billion. By 2029, India’s GDP is expected to be around $6,436.653 billion. (AI image)

The United Kingdom or UK, with a GDP of $3,344.744 billion in 2023, is the sixth largest economy in the world. In 2024, its GDP is expected to be near $3495.261 billion and by 2029 the nominal GDP would be around $4661.463 billion, according to IMF projections. (AI image)

France is the world’s seventh largest economy with a GDP of $3,031.778 billion in 2023. Its nominal GDP is expected to grow to $3,130.014 billion in 2024 and reach $3,645.286 billion by 2029, predicts the IMF. (AI image)

With a GDP of $2,255.503 billion, Italy is the 8th largest economy in the world as per IMF’s 2023 data. Italy’s economy is expected to reach a size of $2,328.028 billion in 2024 and $2,625.878 billion by 2029. According to IMF estimates, in 2024 Italy will slip a level in rankings to 9th spot with Brazil moving up. (AI image)

Brazil is currently the world’s ninth largest economy with a nominal GDP of $2,173.671 billion in 2023. In 2024, it is expected to become the 8th largest economy with a GDP of $2,331.391 billion, leaving behind Italy. By 2029, it will likely have a GDP of $3,058.227 billion. (AI image)

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Top Comment

Suresh Kamath

165 days ago

Raamdev is spot on about the Local Retail players who have been the STRONG BACKBONE of the Market and these new INVESTORS have already done their Homework well and hence dug into the GROUND with solid support for those Fundamental STOCKS which delivered well under any condition of the BULL /BEAR Phase and it is this very SOLID as a ROCK of GIBRALTOR basis which held SENSEX always and these FII are just OPPORTUNISTS who come and go BUT not able to shake the SPIRIT of the MARKET as they did earlier . JAI SRI RAM BHARAT MATA KI JAI

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Why Raamdeo Agarwal believes Indian markets will double in next 5-6 years despite Modi-led NDA's less than predicted mandate

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