While Raghuram Rajan’s shocking announcement of not seeking an extension at the RBI (Rexit) and then Brexit shocked the Indian market, it has recovered well within a short span of time. Speaking to Bloomberg TV India , BSE member Ramesh Damani says India presents a much better macro picture with low oil prices, benign inflation, current account deficit under control and economic growth accelerating. Damani sees India in the middle of a bull market, which will “climb the walls of worries”. Excerpts:

India is in the midst of a bull market and the cheer may continue going forward. How will the global development impact India?

It’s been an unusually volatile and exciting week for theDalal Street. It started with Rexit and everyone was very nervous about that. Markets handled that well. Brexit was a big shock to the market. It recovered almost within 24 hours.

I think the day Brexit happened, there was lot of soul searching that the bull market we saw since 1980s was finally over; globalisation, interdependence, free trade, open markets and all the ideology that propelled us for the last 30 years was over. And Brexit seemed like a rude shock. But increasingly markets have come to the view that Brexit, in its magnificent glories, is not going to happen. I think there’s a Constitutional crisis in England. Scotland will not vote for Brexit. So how will they get this legislation passed? So the EU the British Parliament will get together and work out a watered down deal in which everyone can live with an associate membership or Norwegian-style membership. It will not have the harsher features that we are worried about. And I think the world will go on.

On the other hand, if Brexit takes the form we have been afraid of, that will be disastrous. So I’m betting that calm of mind would prevail.

There’s so much political turmoil and chaos in the UK. How is the market ignoring that?

There isn’t. It’s always important to remember that bull market climbs walls of worries. Markets are really philanthropic. It really gives you an opportunity to get back on the stock. Making money requires conviction.

When I started my career in Dalal Street, the index was 700 or so and now it is close to 28,000. It has compounded at 18-20 per cent over the last 25-30 years. Markets reward patience and conviction. We are just seeing that demonstrated. The easiest thing to say is: ‘Oh God, Brexit has happened and so let’s get out of the market’. But great businesses find a way to climb out of the morass to handle the times. The one thing my career in Dalal Street has taught me is that you have to look for those great businesses. The key is not to buy just anything, but to buy a great sustainable business. They are not easily found. They are not easily available. But when you find them, they are worth the wait involved.

Does that also involve looking for the right valuations? Markets everywhere are at these high levels and a lot of it is fuelled by quantitative easing. So is there a danger at all?

Globally, you’re headed to negative bond yields. I don’t have an idea on how economy behaves when bond yields go negative. Here’s a simple hypothesis and it’s not original thinking. The 10 stocks on the Dow yield 3 per cent today. So in a world where we’re getting negative bond yields, you’d rather put your money in equity where the dividend is safe. So at least you get some positive returns on equity.

Let’s come to India. India actually presents a much better macro picture. Oil prices are coming down, inflation is coming down, current account deficit is under control, growth is coming up and green shoots are visible. We’re in the middle of a Bull market. One thing I’ve learnt, when a bull market starts, it plays itself out.

Let’s start with the 1992 bull market, which started at 800-1,000 and ended at 4,500, which is almost five times the index. This bull market dates back to August 2013. It started at 16,000-18,000. So we got a long stretch to go. Bull markets don’t end in six months or in a year or two. They take a dominant idea that propels the bull market and until it is fully fleshed out, it will keep climbing those proverbial walls of worries

Go back and just look at the 2000 bull market in India, the Technology, Media and Telecommunication bull market. What did it tell you? In 1998, it wasn’t very clear. But it told you, India is going to become a major country in technology. And look what happened to Infosys, Wipro and TCS, the giants you created. They are Fortune 500 companies today. So every bull market tells a story.

This bull market is telling a story of India’s rise to the middle class and into the committee of nations. So I think this will play out many thousand points in the Sensex and many more years to go.

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