He said there is a clear disconnect between the political developments and the economic growth.
Speaking at a seminar organized by industry chamber FICCI on Tuesday, Damodaran said the domestic economy and the markets will get bigger, and better, no matter what was happening in the political sector.
He drew a parallel between 2004, when the stock prices fell significantly when the present government was about to be formed, and the current scenario, when the markets are rising to record levels ignoring the threat to the government at the Centre by a "certain political formation."
"When the current government took office in 2004, the markets fell significantly, after political parties said on record that they did not believe in the markets. Fast forward to the present; what we are seeing is a clear disconnect between the markets and the political developments. Whatever may be the political undercurrents, the economy, and the markets, are bound to go forward at its own pace. It will get bigger and better. Our challenge is to keep it safe (for the benefit of investors)," the Sebi chief said.
"Indian markets have grown to become the 7th largest market in the world," he said.