Sensex@ 60K: Raamdeo Agrawal believes more steam left in rally

Has the breakneck speed of the current stock market caught you off guard? Well, you are not alone as the stupendous one way up-move has surprised everyone world over. India is the best performing market in the world so far this year, having risen over 22%. There seems to be nothing stopping the bulls despite the dizzying valuations and concerns of gradual pulling away of global liquidity as the Sensex hit the 60,000 mark for the first time today. Market veteran Raamdeo Agrawal, Chairman and co-founder, Motilal Oswal Financial Services, spoke to Money9 on what to expect from markets going forward.

“The current rally is still in the making, we are not done yet and seem to be in the midst of the rally. Let’s see how big this can get. I believe markets can further scale up after a pause. Now, there could be a 10-20% correction in markets
but the market journey is much bigger and one shouldn’t bother about corrections”, he said.

While speaking about the prudent strategy for investors at these record levels, he said that stock markets are not a short-term phenomenon.

“Investors need to be invested in markets for 365 days as all days of markets are different. To make serious amount of money effortlessly, investors must remain invested. While the pace of the rally seen in last 12-14 months may not be same going forward as such a sharp bounce can only be seen post a crash.”

He also added by saying that long term investors must know that at the rate of 25%, in 10 years, your investment becomes 10 times.

“At the same rate, in 20 years your investment can grow 100 times while if you stay invested for 30 years, your investment becomes 1000x. Therefore it is essential to never break the compounding cycle,” he said.