Are Indian stocks in bubble territory? An interview given by Uday Kotak to The Indian Express (you can read it here) asks this question. Kotak is making valid points when he says that there is a wall of money coming at the market which does not have enough stocks to absorb the cash. A strong institutional flow is bringing Indian household money to the stock market through mutual funds, unit-linked insurance plans (Ulips), National Pension System (NPS) and the Employees’ Provident Fund Organisation (EPFO). This money is going into a few hundred stocks because the Indian market lacks depth. The market cap of the top stock is Rs6 trillion and that of the 100th stock is just Rs32,000 crore. The market looks overvalued on metrics of the current price-to-earnings (PE) ratio, which is much higher than the 10-year average. Valuations can go back down in two ways—markets can crash, bringing prices down or the earnings can grow; both bring the PE down. The wait for earnings has kept the market buoyant in the past few years and the wait is still on. Which will come first, the market crash or the earnings bump? As retail investors, we have no option but to give our money an equity exposure; see Table 1. But we will never have the relevant insight to time the market. We also know that markets go up and down, get overvalued, crash and then recover. See Table 2. So, is there a way in which we can ride out the bubble, if indeed there is one?
Expense Account, Mint
The aftershocks of the torture and gang rape of the young woman in New Delhi, who died in a Singapore hospital on Saturday, are still palpable almost three weeks after the incident. In the form of the woman who suddenly stares down the man eyeing her in the closed confines of a lift. In the introspection within small social and community circles on how we bring up boys in this country. In most of us who are finally shoved out of our blinkered urban mass affluent slumber. Maybe that’s why that jewellery ad before the movies is suddenly insufferable. The second of two girls born more than 40 years ago, I wonder what it must’ve been like for my parents in this son-crazed paternalistic nation of ours to bring up two girls and no boys. When nurses in affluent clinics in Delhi still raise an eyebrow at fathers who distribute sweets when a girl is born, it must have been a struggle all those years ago to keep the chatter of being a son-less house from reaching our ears. I suddenly realize why I cringe each time I see that horribly regressive jewellery ad—it perpetuates a social system that programmes girls from very early on about their future. The ad goes like this: a little girl is turning the pages of her parents’ wedding album. The dinner table discourse is about how a prince will come and marry the girl and how she will get fancy gold jewellery from her parents on this occasion. The underlying thread of thought in that household is about a girl and her marriage and how her parents will gather resources for it. I can’t remember what exactly our dinner table chatter was about, but it surely wasn’t about how much jewellery we’d get at the wedding.