Kishore Ostwal When the Gulf War ended in 2003, we first became bullish about the market, as our research indicated that the bear market in the commodity had ended that day. It was a double bottom, as the first signs of the lowest level were seen in 2001, when the Twin Towers were blown up. Our research and analysis clearly shows that the top tier and the lowest tier are formed by large international events. Since then we have always been bullish even after Lehman and Covid-19. In fact, we are known as the born bull.
This week there was news that backwardation appeared in commodities for the first time since 2007. This means that the head of the commodity bull market is yet to come and it has been seen in almost all commodities globally. The reason for this may be the stimulus package, but the fact is that the commodity bull market will still be around for the next 4 to 5 years, which we predicted as our bull market cycle. The perception is changing and the position of commodity stocks here will change when more investors are attracted to commodity stocks.
With a weak PE ratio of five to seven, we can see aggressive discounting of 15 to 20 in the coming years, which means that commodity stocks will rise by more than 100 per cent. This can be compared with PSU banks of the time of 2005, which were never given more than 5 PE. We will be bearish with the slogan of ‘sell on rally (surge)’ only when the global commodities reach the top. Then we will not need the capabilities, the recession will start. Until that time, we will continue with our bull market and stick to the buying strategy in the fall.
Jess Stanley of Barclays recently stated that the UK is about to witness the biggest economic boom since the outcome of the Second World War (1948). If it will work for the UK then it will also have to work for Europe and other parts of the world and it is good for India. The UK, Europe are less productive and largely dependent on China, India and some other countries. In this way, this time of 15 percent corporate tax of India can prove to be a boon for MNC to establish their business here. It is irrational to dismiss the bull market scenario by Bayers by repeatedly saying that the market has reached the top.