Will Nifty keep going up forever? Uday Kotak shares a Japanese lesson
Nifty is ending the record-breaking year 2023 with a handsome upside of 20%, billionaire banker Uday Kotak on Friday warned Dalal Street's Covid batch of investors of the unpredictability of the stock market, giving the example of Japan.
«Many investors have joined post Covid. They have mainly seen upside.
While the situation is not comparable at present, we need to keep Japan of the 80s at the back of our mind. Its Nikkei Index peak was in 1989.
34 years later with near zero interest rates, the Nikkei is still below its 1989 peak,» Kotak wrote on X.
He said we must avoid bubbles through policy, regulation, education, and supply of quality paper. Companies should raise equity at a lower cost of capital for productive use, the billionaire banker said.
As India is transforming from a nation of savers to investors, he said the tussle between the saver/borrower and issuer/investor model is underway.
To create a sustained growth story from hereon, he said unless we avoid tax arbitrage in debt and unless debt markets grow it will be a one-legged race.
«The current gap on the highest marginal tax rate between debt and equity of 39% and 10% is perhaps too wide,» he pointed out, while also recommending that the government must relook at double taxation on dividends.
«A shareholder is like a partner. There is no additional tax when money is moved from the partnership to the partner's capital account.
