This time , I am going to devote some time on the India growth story which everybody including the big investment banks, FIIs , and our own domestic industrialists in their wisdom had almost given up.
I would refer you back to a blog I had written on 25th June 2011 on the topic
“Biggest growth story of the 21st century – Indian economy”
I had clearly talked about why and how Indian economy is the biggest growth story of the 21st century just like how the US economy was the biggest growth story of 20th century. I talked about how and when the Indian economy is going to become the biggest economy by 2050(as per the projections of leading Investment banks and US Govt) .And how we can create huge wealth for us and our coming generations in the next 40 years by investing in strong businesses with competent managements in India.
I still stick to my projections, forecast and advise . Never give up on India growth story . India will be the biggest growth story , despite our government and political leadership. There are many strong factors like Demographic dividends(the fact that Indian population is and would be the youngest for many decades), huge local entrepreneurship talent , English language capabilities, very high savings and investment rates(34-38% of GDP), growing consumerism , huge middle class etc would ensure that we will continue to grow at an average growth rate of 8% for a few decades. This would translate into nominal growth rate(real growth rate + inflation) of 14-15%(assuming 6-7% of inflation) . This in turn would translate into about 20% sustainable growth rate for the best in class blue chip companies.
Do you know what can the magic of compounding(compound interest) do to your money growing at 20% in 10, 20 , 30 and 40 years? Your I lac INR can become 40 Lacs in 20 years, 250 Lacs(2.5 crore) in 30 years and 1500 Lac(15 Crore) in 40 years. Remember ,Time in the market is always more important than timing the market . Right business/ stock selection and Right temperament( patience and conviction on your choice) are the biggest success factors here. Warren Buffet became a billionaire after 50 years of patient investing and not overnight.
In December 2011 and Jan 2012 , I discussed my top 10 business or stock pics with you . Those stocks have grown by 30% Year till date while sensex has grown by 21% Year till date with 3 more months remaining for the year . This is not a bad return for a volatile year like 2012 with so much of global and domestic crisis. I never gave up on India story . In fact , all these months , I steadily built up my investments in these businesses with every dip in the market. Remember that the market always over-reacts on both the sides for good news as well as bad news . We need to exploit the over-reactive and short sighted nature of the market and invest in strong businesses which get painted by the same brush of macro bad news though their specific or micro fundamentals don’t go through any significant or lasting change. I have continued to invest in strong but beaten down businesses/ stocks like Axis Bank , Bank of Baroda, BHEL, L&T, Rural Electric Corporation, IDFC , M&M, GAIL etc with every opportunity presented by market or stock dips. Once you have invested in these great businesses with durable competitive advantages or economic moat (as Warren Buffet would put it), just shut your ears from the market noise and allow the earnings growth and time to take care of your money .Thats the biggest secret of success of all the great investors, especially value investors of the world.
Happy Investing . Cheers for the sustainable Indian growth story.