Like in Russia & China, strong governments who think too much of themselves are dangers to stock market returns:Ajit Dayal

economictimes.indiatimes.com:

Ajit Dayal, Founder, Quantum Advisors, says “unlike China, India has a one-to-one correlation between stock market returns and GDP. When GDP grows, stock market returns grow. In China, that correlation broke about eight-nine years ago and it is not likely to go back given that strong leadership and strong governments who think too much of themselves are dangers to stock market returns. They may not be dangerous to GDP growth rate because strong governments or strong leaders can encourage crony capitalism. We have seen that in Russia and China. Therefore, we pray for coalition governments in some sense because then you have automatic risk management.”

Today is an interesting day because the Nifty after going to almost 19,200 or thereabout has come back to 19,600-19,700. There was a fear in the market that this change in global narrative of higher for longer which our Governor Das also alluded to today, is likely to dislocate markets globally. Since India has relatively outperformed the world, it was thought that we are likely to fall a lot. But that narrative has not played out entirely in India. How scary is this higher for longer in your view for risky assets overall?
If you look at the way the global interest rates have been, since 1980, you have had basically a one-way bet on interest rates that they will be declining and that is what has happened.

In fact, in the last two decades or so, in the last 15 years or so, post Lehman, we have had a whole generation of investors who are basically what we call play money. So, there is money and the minute there is cost to money, it becomes capital.

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