Dalal Street Set for the 'Fourth Wave': Ambit

Investment bank Ambit Capital believes that India is at the beginning of a "fourth wave" of economic growth and investors in the initial years could gain handsomely.

Ambit in an earlier report had argued that India over the past 30 years had seen three waves of growth - 1985-92, 1993-2003 and 2004-14.

Speaking to NDTV Profit, Gaurav Mehta, vice president of institutional equities at Ambit Capital, said these economic waves last for about 10 years on an average but more than two-third of the returns come in the first three years. (Watch Video)

"Markets are forward looking and tend to discount a lot of things about to happen in the initial few years itself," he said. "A stable government after a long time and a 'proactive' RBI governor will help the discounting process to continue even though the on-ground economic improvement might take a little more time."

Indian stock markets have recovered all of its falls after the Budget was unveiled on July 10. Some disappointment that the government had not announced any big-bang measures had sparked a bout of profit-taking.

"The expectations going into the Budget was huge. But the good part is that despite the Budget meeting not those expectations markets are holding up," said Mr Mehta. "People thought that budget would be the next big thing that would provide a big impetus to the markets."

Despite no big-bang measures in the Budget, Mr Mehta says the government "did provide certain small steps that could help build a base that could help create the big thing in the future."

Mr Mehta believes that Indian markets are in an uptrend "with the Budget moderating it to some extent".

Ambit sees Sensex at 30,000 levels by March next year, implying gains of 17 per cent from current levels. Mr Mehta says Sensex has support at 25,000 levels and if it is broken, there could be a 5-6 per cent correction.

On Friday, Sensex closed 80 points higher at 25,641, extending its gains to the fourth day.