The greatest wealth creation opportunity

Sensex at 6,000: What a ticker we have had RAKESH JHUNJHUNWALA
The Indian Express Sunday, January 04, 2004

• SENSEX 6000 is a milestone of significance for me personally, for my fellow investors, and above all for India.

It is not just a coincidence that the Sensex has touched 6000 just when GDP growth has crossed 8 per cent for the first time, and the yield on Gilts is hovering at 5 per cent. It is a moment of great pride for all of us. The Sensex PER (price earning ratio) today is about 15x whereas at the same level of the Sensex in 2000, it was around 30x with the interest rates prevailing then being double. The PER in 1992 was more than 50x with even higher interest rates. Today’s corporate earnings quality and governance are vastly superior to those prevailing in previous bull markets, as also the quality of companies that have outperformed. I believe this is a mature market that has learnt many a lesson in the last decade. And our capital markets are better regulated than ever before by SEBI.

• Hence, the constant barrage of scepticism about the sustainability of the rise and the worry-warts fretting over some imaginary scam is most irritating.

The BSE PSU index has been the best performing index. The greatest beneficiary is the Government of India— where is the question of a so-called “Scam”? The pace and the quantum of the rise in the Sensex have surprised most Indians, but markets being markets, they always tend to surprise. To the wise, in any market, ‘the ticker tells all’ — and what a ticker we have had. While all attention is focused on the Sensex, we must not ignore the tale of the other indices. Most broader indices have outperformed the narrower indices. The Advance-Decline lines, and the new highs and new lows are all signals of unprecedented breadth in the markets.

• But cynicism is still alive and kicking. It is a pity that such fear-mongering is depriving my fellow investors from the greatest wealth creation opportunity of their lifetime. It is my deepest regret that it’s the FIIs and not my fellow Indians that are doing all the buying, and making all the money.

At this poignant moment, I am a happy man — as much for the gains that I may have made, as for the vindication of my bullishness about India’s fundamentals and consequently its equity markets which I have often articulated.

• Wake up fellow Indians, this milestone of Sensex 6000 must help us in recognising the transformed India which can surely with the effort of all us become one of the economic powerhouses of the world and consequently a world power. Please, please unshackle yourself from our inherited cynicism and break the inertia of our minds about our country and its future.

Please remember, this is not some politician or economist writing this, but an investor for whom reality is a religion, and price is omnipotent. (Jhunjhunwala is a BSE broker and an active investor.)