Seven Dark Clouds Hanging Over the Great Indian Party ; the India Story Is for Real, the Fundamentals Couldn't Be Sounder, but Let's Not Get Carried Away with Our Exuberance. Here's a Reality Check On a Few of the Glaring Concerns That Could Mar the Celebrations.

Summary

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Rakesh Jhunjhunwala, arguably the biggest Indian bull trotting down Dalal Street, is a bit like Vitalstatistix, the village chief of the tribe of Gauls in the legendary Asterix and Obelix tales: Always full of beans, plucky (and both are a bit quick-tempered too!). Jhunjhunwala for his part has been diving into Indian equity with the same gusto that Vitalstatistix wades through the Romans in their inevitable battles. For all his bravado, though, Vitalstatistix has a lurking fear. The Gaul chief is afraid the sky may fall on his head tomorrow. D-street's big bull isn't as vocal- he's a bull after all, and he'd rather talk about price-earnings expansions, ambitious Sensex targets and sustainability in corporate earnings.

Yet, in a recent slide-show presentation put together earlier in the year by the country's most popular value-investor, which seeks to make a case for big-time, long-term investment in Indian markets, Jhunjhunwala spares a slide (just one out of 74) for what he terms "potential party spoilers". Unlike Vitalstatistix's solitary anxiety, Indian investors it would seem have plenty of them. Jhunjhunwala classifies them into three categories: Near-term anxieties, which include elections, crude oil prices and the monsoons. Then there are the "omnipresent" fears, which include the uncertainty in the global economy, oversupply of IPO paper and the falling us dollar. Finally, under the long-term sub-head, Jhunjhunwala has rising inflation and interest rates, as well as Indo-Pak tensions and terrorism as possible poopers of the equities party. In the current context, unarguably the most relevant of the worries powerpointed by Jhunjhunwala is the direction in which crude oil prices are headed. Rising inflation is of course a corollary to that.

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Seven Dark Clouds Hanging Over the Great Indian Party ; the India Story Is for Real, the Fundamentals Couldn't Be Sounder, but Let's Not Get Carried Away with Our Exuberance. Here's a Reality Check On a Few of the Glaring Concerns That Could Mar the Celebrations.

Of course, like old warrior Vitalstatistix, Big Bull Jhunjhunwala too might like to believe that "tomorrow never comes". But then, as history painfully reminds us time and again, tomorrow always comes. After all, disaster, or even disappointment, doesn't have the habit of tapping you and your shoulder before announcing: "I am coming." Market crashes by nature are sudden and unexpected (else they wouldn't be called crashes, right?). The skies may have not yet fallen on the 28-storey P.J. Towers, headquarters of the recently corporatised Bombay stock exchange-and they probably won't-but plenty of bull runs of the past have almost overnight been abruptly halted, reversed and erased, along with crores of small investor savings. There's little doubt, though, that the ongoing bull is fundamentally sound, that the Indian economy is growing much faster than the global average, that the country's purchasing power parity is right up there, that business confidence is upbeat, that valuations may not yet be stretched, that 15-20 per cent earnings growth can still be sustained... all that and much more.

Bulls are in...

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