The markets took a breather for a couple of years, though the corporate growth was on track. BRIC report by Goldman Sachs broke the silence in Indian equity markets. From 2003 onwards, Indian stock markets primarily moved around infrastructure theme. Global investors on the back of low interest rates got into the carry trades. Borrowing in a weak currency such as the yen with very low interest rates and investing in a country such as India with a strong currency with potential to earn superior return turned out to be the most important strategy for foreign money.
Within the theme, capital goods were one of the most preferred destinations for many. The companies saw phenomenal growth in both business performance and stock prices. Rally till 2007, along with bull market in equities, encompassed many other sectors such as financials and real estate. Real estate stocks could fetch dizzy valuations on Indian bourses. Analysts found solace in businesses with land bank stories. There are instances where stocks of companies with almost no operating businesses saw multifold price rise on the back of land banks.
Along with real estate, energy played a key role. As crude neared $150 mark per barrel, the power starving economy searched for all power generation stories. Power turned out to be one of the sought-after sectors. Reliance Power hit new records in terms of valuations.
Courtesy ET Dtd: 14/06/2010
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