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India vs US market by Rakesh Jhunjhunwala
August 30, 2007
Jhunjhunwala believes that India has all the ingredients that the stock markets value and hold in high regard. Just as cheap credit in the US fuelled its growth, (one must refer to the graph on the left hand side), India owes its progress to the following factors:
Efficient capital allocation
Sustained earnings expansion driven by growth and productivity
8 per cent+ real GDP growth + 4 per cent + Inflation = 12 per cent + Nominal GDP growth
Corporates to grow faster than unorganised sector
Operating and financial leverage to kick in
Corporate earnings to grow at more than 18 per cent
Favourable framework for equity investing
Rising savings, yet low equity ownership -- significant potential
Corporate governance
Transparency
Effective regulation
Electronic trading
Dematerialisation
Tax paradise for equity investing under the STT regime
Text, courtesy: RARE Enterprises and Shailesh J Mehta School of Management, IIT, Bombay
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