As India grapples with the spread of coronavirus, a clear dichotomy is emerging between distressing macro-economic data on one hand and a surging stock market on the other.

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With GDP plunging to new lows, a contraction in economic activity imminent, and a sovereign rating downgrade handed to India, it becomes harder to explain why Indian benchmark indices ended this week with a six percent rise, for instance.

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India's billionaire banker Uday Kotak has an answer. "Are the markets right or what the economy is saying is right? My position is very clear," he said in an interaction with CNBC-TV18.

"If you talk to investors and analysts, most of them are saying that for 2020 earnings, we have washed our hands off because we don’t know what they will be like," Kotak said.

He added that investors are now looking at corporate earnings trajectory over the medium term, say for financial years 2022 and 2023 instead, when they see earnings momentum returning.

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"The same principle applies to the Indian GDP. Steps which we take for GDP are not to try and get the average for this year better, because a lot of the damage is done," he added. "What we need to take is medium term steps to get our trend GDP in FY22 and FY23 to higher levels, just like markets are doing for earnings."

Kotak said if we adopt this approach, "the stock called India will have a dramatically higher valuation from where it is, provided we can show a medium term GDP strategy of higher trend income growth than what many people may be pricing today."

So what is Uday Kotak's advice to India Inc? "Markets when they are giving the values, they are actually putting money on the line... My advice to most of the companies in India who will need more risk capital- if markets are taking a view that we are making capital available, please go ahead and take the capital to strengthen your balance sheet for the future opportunities that may be there," he told CNBC-TV18’s Shereen Bhan in an interview.

When asked what he makes of India’s growth recovery, if it will be U-shaped, V-shaped or Kotak replied with a smile. "You check out your Hindi dictionary- what is the first alphabet for sunrise in Hindi? It is Uday, the Rise of India," he signed off.