Why a massive bull run is waiting to

happen on Dalal Street

Notwithstanding the 1 day bear market rout this week

The market fell a whopping 432 Nifty points (or 3.14%) on Wednesday 21 December
before rebounding to test the all time high (ATH). It definitely was the largest
single-day fall in recent times.

Can the market fall further? It definitely can.

Should you be worried? I don’t think so.

In fact, this was a much-needed and anticipated correction. And corrections are signs
of a healthy bull market consolidating for another bull run.

The excesses of this fierce run will be retraced before the market takes cognizance of
the rapidly improving earnings and the consequent analyst upgrades.

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While this unbelievable rally has been dumbfounding for those that missed it, it has
been equally enthralling for those who participated (and left them gasping with joy
from the sheer profits).

So what really caused this rally? Is this rally sustainable going forward?

Or is it just a flash in the pan - a fallout of the loose fiscal policies of the Western
governments?

While the answer would obviously be delivered in the future, I would choose to
believe that not only is the rally sustainable but also that it has a long way to go.

Before you say that my confidence is misplaced conjecture, I would like you to
consider my 5 point rationale.

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India’s post-pandemic measures have, hands
down, delivered the highest return per unit of
stimulus
Unlike Western governments, India did not throw money at the pandemic. Modi took
his time. He did not have the balance sheet to replicate the western profligacy.
Carefully calibrated and detailed micro reforms were targeted at the masses and the
most vulnerable sections of society.

This ensured that scarce resources were not withered away and that we will not face
the repercussions of runaway inflation that the world is destined for.

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With one of the lowest corporate tax rates in Asia
(for new corporates), India is a favoured
destination for global funds.
Post pandemic the western world is extremely circumspect of investmenting in
China. In fact, investors are exiting China.

Ex-China, while considering investment options, other competing economies pale in

comparison to India. Given the sheer size of our economy and the demographic
opportunity, we are the only large geography that can address the insatiable demand
for global capital flows. Vietnam and Bangladesh are minions for global trillions.

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And now with one of the lowest corporate tax rates, India is the default destination for
global capital flows.

The Modi reform train which is hurling down the

track at breakneck speed is increasingly finding
approval with global investors.

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Post pandemic a special truncated session of the Parliament was held. However the
Bills passed during the session were truly iconic in their own right.

The positive repercussions are already being felt. And this has spurred the foreign
investors’ confidence in our economy even further.

Technology adoption has been swift and across all

strata of society
The introduction of the digital stack a few years back had sowed the seeds of massive
transformation. In the backdrop of the pandemic, technology adoption has only
accelerated. Today not only large corporates, but even the SME / MSMEs and small
businesses have taken a deep dive into technology and embraced digitization to cut
costs and become lean.

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Technology and digital payments adoption at scale has unshackled the growth of
business in an unimaginable way leading to a rebounding economy and improved
profitability.

The monthly GST collection numbers and the half-yearly results are mere reflections
of an economy picking up momentum.

More reforms on the anvil leading to the budget

2021.
The Modi reform juggernaut is simply unstoppable. And with the digital signature at
its core, the impact is almost instantaneous and transformative.

I am highlighting a few measures that have been already been introduced and are on
the anvil of becoming law so that the reader can appreciate fully the extent of their
impact.

● The soon to be launched software upgrades and sweeping changes to GST

billing would mean evasion would be virtually impossible.

● New Farm Laws mean more prosperity for the farmers.

● A new mining policy will be a game-changer for tapping the vast natural
resources.
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 ● Upgrades on renewable energy targets may not mean that the fiscal deficit
would come down. But definitely, future liabilities do not appear as daunting
given that India is 80% dependent on imports for its energy needs.

Low interest rates spurring economic growth and

profitability
The interest rates may have hit bottom. But neither are they expected to rebound any
time soon given the sluggish global economy and the worldwide consensus on the
low rates persisting.

This has literally clipped the interest burden, which was the single largest killer of
corporate profitability. Not only is the health of the corporate profitability on an
upswing but the low interest rates have spurred demand in ways unimagined.

Classic Keynesian economics is at play leading to a virtuous cycle of growth and

prosperity. With this trend at a nascent stage, we can expect the upswing to last for a
few years.

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There is only one way for the stock market, and it
is up
In a global economy parched for growth, India is an oasis of opportunity. Global
events and Modi’s leadership have connived to create a once in a lifetime opportunity.

For a moment step back and wholistically view the unfolding of events of the last 6
years of the Modi regime (ignoring the political histrionics). You cannot help but
appreciate the purposeful design and (almost) flawless implementation of his policies,
and that too at breakneck speed.

We are fortunate to witness one of the globe’s momentous times of economic

prosperity playing out. And investing in the capital markets is a way of celebrating
this prosperity. Use every correction in the market, shallow or deep, to buy. We are in
a raging bull market.

If you were dumbfounded by the rally that took place, here is another opportunity for
redressal. DO NOT MISS IT.

Vinit Bolinjkar​, the author of this article can be contacted on Whatsapp 9730836363 or
email at bolinjkar.vinit@gmail.com

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