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in 2002 Rak junjun Wala saw a turning point in our stock market he wrote his thesis in an article in economic times and it is around this period that he went and bought his iconic stocks that later on made his fortune chrysle Lupin and of course Titan so what were these signs that he saw and do they hold good today so the first sign that he saw was that there was a 10-year bare Market that receded 2002 from 92 to 2002 the sensex went nowhere if you recall 92 was the peak of the harad meta bull market and uh since then the this the stock market went nowhere so he saw that as the first positive sign the second sign uh that junjun Wala spotted was the price to earnings or p ratio the p ratio of the market in 2002 was just 12 does that hold good today here I would say no our current p ratio for the index is 25 It Is by no means cheap the third sign that raki janala saw was the economic reforms momentum he said that there had been reforms done in banking and Telecom and he was hopeful of further reforms in other sectors that has indeed unfolded now the question is does that story hold good today there is every reason to believe that the reforms momentum will continue uh it has been quite robust in the past 5 to 10 years and there's almost a political consensus behind economic reforms the next sign that janala saw was about earnings growth so he felt that earnings growth was quite strong in 2002 and will get stronger in the next few years what unfolded of course was the first boom period um that immediately followed 2002 20 2007 is that true today so if you look at this mid and small cap space earnings growth indeed has been quite strong and that has supported the rally in that space and will that continue again there is every reason for it to indeed continue uh there are no dark signs yet the next uh sign that jjin Wala saw was about the money flowing into the stock market he said that at the time in 2002 the size of the entire Indian mutual fund industry was just 2,000 crores today that size is 50 lakh crores now again will that continue going forward if you look at how much Indian households allocate to mutual funds it's just 8% of their balance sheet so there is every chance that this momentum continues to grow the next sign that junjala saw was of Market structure and that changing so if you think of the market in 2002 uh it still had the legacy of the 1990s of physical share trading of slow settlement of um signature mismatches issues like that those got fixed over the next 10 years now the question is in today's market is there more scope for this to run arguably there is although settlement has gone from um 10 days 14 days all the way to instantaneous settlement that sebi is now trying out um there are areas like kyc that can see further reforms and further money coming into the market the last sign that jjun Wala saw was of Market momentum he saw that every dip was getting bought and there was inherent strength in the market is that true today again if you look at all the dips and Corrections that have happened in the past 2 to three years they have rapidly being are being bought even if you think of the covid-19 correction that to was canceled out in the matter of a few months so there is an inherent strength to our market and that factor also holds good today
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