Markets Can Still Provide 14–15% Growth As Fundamentals Positive, Says Angel One's Thakkar
There was a froth because of excess liquidity which has gone now, Dinesh Thakkar, chairman and managing director, Angel One said.
Despite persistent losses in Indian equities, markets still have the potential to give compound annual growth rate of 14–15% returns, said Dinesh Thakkar, chairman and managing director, Angel One Ltd., adding the basic engines required for stock markets to grow are there. The bet should be on the growth of economy. For the next 10-15 years, India will continue to grow at 7%, while inflation will grow at 5–6%.
"Always look at fundamentals. Is India going to grow at a lesser rate than 6.5–7.00%?" said Thakkar. The median age of Indians is 25–28 years, so people have 30 years of career ahead. They should think about how to compound their wealth, and the right asset class. Simplest, easiest would be equity. It's simple to enter and exit.
There was a froth because of excess liquidity which has gone now. With foreign institutional investors selling, and not so active domestic investors, there's a repercussion of that which is playing out, he said.
What Should Retail Investors Do?
It's a good opportunity to enter the market at a good valuation. There's also chance to buy good-value blue-chip stocks, according to Thakkar. The advise for retail investors would be to start an SIP in case they have not started. Average price is important because from there compounding will happen.
Retail investors do not have expertise to select blue-chip stocks. For them, it's good to go and buy index funds: Exchange Traded Fund. Those funds give them good exposure to the the economy, Thakkar said.
For those thinking of starting a business, it's a great time to do so. For those into fintech, Thakkar said the past events were nothing compared to what the future held, which would be far more exciting, he said.
For those unable to think about starting their own venture, the markets offered a secondary investment. "Do your job, put your excess money in equity, which will give you good compounding," Thakkar said.
Two types of investors entered the markets post COVID, those who had some savings because of the lockdown and, hence, they put it into the markets. They were not successful in trading and earning money from it. However, they understood the markets and learned how equity markets worked.
The second set of investors believed in algo-trading, high frequency and technical knowledge related stuff. They came to learn how to trade instead of speculating. These are professional traders who will stay in the market, Thakkar said.
