Yes..India is growing at 9+% growth rate and it will continue to do so in the time to come. But every future growth has a present value. So the indices at a particular point would factor in the rate at which we are growing. So are we above that point, below or just have made it? My guess is that we are grossly overvalued and are a bubble waiting to burst. Whether the burst happens today, tomorrow or 2 years from now? I don't know. For that matter, no one really knows. No matter what the so called analysts in the pink newspapers say or what crap, the 24x7 financial news channels dish out. The fact is that this is the kind of market that a conservative investor like Warren Buffet would want to stay away from. Watching the way the indices are breaking each 1000 point threshold, it almost feels like watching 20Twenty cricket. But just as 20Twenty is not real thing so is the case with the current mania on the bourses. Sooner or later, the earnings are not going to meet up with the expectations built up in the prices.
Glancing at the favourite blue-chips quoting at 50-60 x their current earnings (in some cases, even triple digit P/Es), you know that they are no longer your favourite blue-chips. That is, if you are investors. For the thousands of punters out there, they still continue to remain so. So calling the way Mr. Market is behaving as bubble or a growth story depends upon which side of the divide you are on. I, for one, being a compulsive contrarian have sold off most of my portfolio for the time when better sanity prevails. Hope it happens soon.
