5 stock market myths in a raging bull market: Kotak Equities
market myths and debunked them in a note. The myths listed by it include one that says that Indian markets are trading at reasonable valuations and the other that says that strong GDP growth is akin to high returns.
Indian headline indices S&P BSE Sensex and Nifty50 have been creating new records since its June 4 debacle when the market crashed on the election results not giving a full majority of the Bharatiya Janata Party (BJP). There has been no looking back since then, with Sensex traversed over 8,300 points while Nifty soared 2,500 points. In percentage terms, the gains have been to the tune of 11.5%.
On June 4, the Sensex hit a low of 72,079 while the Nifty bottomed at 21,884.50. Both indices today hit fresh lifetime highs of 80,392.64 and 24,401.
«We concur with bullish arguments — decent macro, strong earnings growth, long-term growth prospects — are pointless without the overlay of valuations. It is obvious that the same argument cannot hold at all price levels,» the note said.
Here are Kotak's 5 myths for investors:
Myth 1: Indian market at reasonable valuations
Kotak has debunked what it called a myth that 'Indian markets are trading at reasonable valuations'. It said that this superficial view of the Indian market is typically based on the valuations of the Nifty-50 Index. The Nifty-50 Index may be reasonably valued in the context of historical valuations and bond yields but most other parts of the market are trading at full-to-frothy valuations after a massive rerating in their multiples in the
