Ramesh Damani sees froth in the market but not a bubble

On March 20, the Nifty 50 turned negative for the year, giving up all the gains since the close on December 29, the last trading day of the last year.

The sell-off has been more severe in the midcaps and smallcaps driven by the fear of unwarranted exuberance. This is a fear shared by everyone from the market regulator to the mutual funds lobby, all the way down to many small investors.

However, ace investor Ramesh Damani, who is also a member of the Bombay Stock Exchange, doesn't see it as a bubble that's waiting to burst. "All bull markets end, even this one will end, but for now, it’s a green signal ahead. I feel the market is at a reasonably good state," added Damani.

Nifty 50, the benchmark index of the country's largest listed companies, has gained more than 2.2 times in the last ten years.  In the meantime, India has grown to become the fifth largest economy in the world.

"Japan went from a third-world country to the second-largest economy in the world. Companies that were unknown in Japan—Sony, Hitachi, Honda—became household names.  India is on a similar trajectory," said Damani as part of a panel at the ongoing Rising Bharat Summit 2024 in New Delhi.

Aashish Agarwal, Managing Director and Country Head, Jefferies India, who was part of the same panel, had a similar take on India. "The economy will touch about $5 trillion by 2027. The market cap will reach about $10 trillion by 2030. I don't think any other country can talk about so many things coming together," said Agarwal. He added, "I think it's a lot more parallel to what the US went through in the 80s." 

However, despite the belief in India's long-term potential, Damani advisesd investors to be vigilant while making decisions.

Sharing the broader trend from the private equity funds space, Shweta Jalan, Managing Partner and Head of Advent International, India, said, "India is not a story of one or two years; it's a multi-decade growth story from here and it will be a pity if we don't capitalise on it.