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Raamdeo Agrawal, Chairman & Co-Founders of Motilal Oswal Financial Services.
Image: Bajirao Pawar for Forbes India
The bulls have been fighting to stage a comeback on Dalal Street. Higher-for-longer interest rates, a strengthening US dollar, rampant selling by FIIs, the Israel-Hamas war, and tepid second quarter corporate earnings caused jitters in the market. Raamdeo Agrawal, chairman and co-founder, Motilal Oswal Financial Services, is not worried. He advises his clients to think long term and focus on the magic of compounding. This forms the core of his investing principles. An eternal optimist and a firm believer in the long-term growth potential of India, Agrawal says he is not unduly distracted by the global developments and is fully invested at all times.
“Global macros, monetary developments, will keep happening, but you can't stop India. You can't stop this market. We are in a proper bull market and at times it is scary how big it can be because the participation is large,” he says in a part-two of rare and exclusive joint interview with Motilal Oswal on Forbes India Pathbreakers in September. Agrawal believes new-age technology companies will lead the charge. “In 10 years, we will see a lot of digital companies or digitally powered businesses forming the bulk of the stock index. They will come from behind, they will be 10-12 years old, but they will be much bigger and much more ferocious, fast growing, and much more profitable. They will be right on top of the current set of companies,” he predicts. Edited excerpts:
New-age tech companies: ‘Froth got over last year’
The composition of companies listed on the benchmark stock index will change quite significantly and a lot of digital companies will become a part of it. In ten years, we will see a lot of digital companies or digitally powered businesses forming the bulk of it. Ten years is a long time for successful digital companies to become seriously large. For example, in our industry, Zerodha, around 12-15 years old, is multiple times of us today. So, that is what is going to happen in many businesses. The digital businesses will come from behind. They will be 10-12 years old, but they will be much bigger and much more ferocious, fast growing, much more profitable. So, that is what is going to happen. They will be right on top of the current set of companies.
[At current market prices, listed new-age tech companies are not frothy]. The froth got over last year, some recovery has already happened. But very few are listed right now. The whole lot of them are waiting to do an IPO. They will all come in the next 2-4 years as the market stabilises, they become profitable, and they earn the right to go to the market. Those things will happen. But when you ask about ten years, ten years is a long time, in five years, you will see a lot of digital companies listed and a lot of these companies will scale up. They are scaling up but they're not listed right now. They will come in a scaled-up format in the next two-three years’ time. Also read: Only smoke, no fire: Raamdeo Agrawal and Motilal Oswal on market rumours of a rift between them
Rise of retail investors: ‘I think FIIs will not be powerful going forward’
In the last 2-3 years, one of the big changes which has happened is the mass or retail participation in equity. From Covid, January- February 2020, anywhere between 2 to 4 million customers are entering the stock market every month. This is unprecedented and almost 10x-12x to what was happening before. We are actually witnessing a revolution. This is headed to become 300 or 400 million. So, the power of FIIs is already muted. They have some power because they own 18-20 percent of the market. But as we go forward, if FIIs don't acknowledge this, I think they will become a thing of the past, in the sense, they will not be powerful. The local retail will become very powerful. So, I think this is a time of changes.
Market outlook: ‘We are in a proper bull run’
[Interest rates have gone up]. Global macros, monetary developments, will keep happening, but you can't stop India. You can't stop this market. We have been in a bull run for the last 40 years but this round has started post 2020 after Covid when it fell from 12,000 to 8,000. From there this run has started, it will see its own course. I think 12-15 percent whatever. But we are in a proper bull market and at times it is scary how big it can be because the participation is large. A decade from now, you can say, we should be looking at Nifty at 70,000 to 80,000.