Why Raamdeo Agrawal Says Pricey Indian Markets Will Be Attractive In 2023

In the backdrop of a looming global recession, India is very stable and is expected to grow 5-6% in 2023, according to Raamdeo Agrawal, chairman and co-founder of Motilal Oswal Financial Services.

India has stood out in the face of a rapidly advancing recession, while major economies such as the U.S. and Europe are crumbling under its weight. Alongside this, the Russia-Ukraine war is expected to go on for three to four years, Agrawal said, citing a media report.

Separately, China has been fighting its own Covid-19 war, with caseloads surging while lots of attrition is seen in businesses, Agrawal said. The China Plus One strategy is definitely going to happen, and India will emerge as one of the beneficiaries of the same, he said.

"People would like to diversify, not exit, but diversify for their incremental requirements," he told BQ Prime.

"India is very strong on the domestic economy and, to some extent, resilient on the software exports side," Agrawal said. On top of that, falling commodity import prices also help. "So, all in all, I think we are slowing, but we have a very robust domestic economy. I would think we should go at 5-6%."

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India At The Forefront

India's growth potential, from where it stands today, is very robust, according to Agrawal. This is "way above" any other country and for a much longer period.

"I think as far as cheapness is concerned, every asset has its own at a given point in time," he added. "I think that a much longer period, like what has happened in the last 25 years, can continue without any problem for the next 25 years."

Agrawal added that there could be some slowdown for four to five years due to policy corrections. While India's per capita GDP is low at about $2,500, the global average is between $10,000 and $12,000, which gives it headroom to catch up in the next 20 to 30 years, added Agrawal.

Although the brokerage stays "very domestic-centric" as far as global investors are concerned, investors who are allocating globally would like to take a shot at markets that are very successful, Agrawal said, adding that India is one of the "very successful" ones.

Citing some discussions he had with global investors, Agrawal said that these investors intend to turn 8–10% of their corpus into India over the next seven to eight years.

"I think the outlook is very good; it’s for the policymakers to understand the needs of these entities and conduct the policy in such a way that the growth is intact," Agrawal said.

Considering the uncertainty amid the recession pressure, Agrawal said he would rather take a lower return for some time than no returns. Agrawal would want to be involved in the market even in the case of a 10–15% correction.

Also Read: First Half Of 2023 Won't Be Easy For Indian Markets, Says HDFC Securities' Unmesh Sharma

PSU Banks

Agrawal said that the valuations for PSU banks are very attractive. Profit growth has been massive, he added, while book growth has been cautious.

The banking sector is riding on a strong credit cycle, and even volatile banks are going from half a book to one book or maybe to two and a half books given the credit cycle remains very strong for a long time, Agrawal said.