A couple of sharp sell-offs seem inevitable in 2010, but the year could well be the second year of a bull run; just be nimble enough to cash in when the dry patches come
Udayan Mukherjee is Managing Editor of CNBC-TV18.
His Call: The stock market is structurally bullish. Corrections will come but won't change the big picture.
His Big Investment Idea: Look beyond index heavyweights. 2010 could be the year of midcap stocks.
So yes, there are walls of worry but bull markets are supposed to climb them. It’s the volatility which has driven away local investors. When markets fall 60 percent in one year and double the next, investors just don’t get enough confidence to participate. This is perfectly understandable. Yet, if there is one lesson from the wild swings of the last two years, it is this: India has a strong and resilient growth story going, if you buy the market every time it trades around or below a PE of 12 and are prepared to hold for at least 18-24 months, you will make a lot of money. I oversimplify, of course. I could have said 10 PE but that implies catching panic bottoms which aren’t easy to do.
(This story appears in the 22 January, 2010 issue of Forbes India. To visit our Archives, click here.)