Sensex at 200,000? Attainable in 10 years, says Raamdeo Agrawal

If market specialists are to be believed, that is only the start of a serious bull-run for India’s inventory market. Wholesome progress in company revenue for the following few years, coupled with beneficial demographics can take the indices to stratospheric ranges within the years forward.

Raamdeo Agrawal, co-founder and joint managing director, Motilal Oswal Monetary Providers (MOFSL) has mentioned in a Might 27 observe that he expects the S&P BSE Sensex to hit the 200,000 mark within the subsequent 10 years – up almost 4 instances (4x) from the present stage of round 51,500 – and advises traders ‘to not wager in opposition to India.’

For the S&P BSE Sensex to realize this monumental feat, Agrawal expects company earnings to develop at 15 per cent on compounded annualised foundation (CAGR) for the following 10 years – a tad larger than the nation’s gross home product (GDP), which he pegs at 12 – 13 per cent (nominal GDP). Market return going forward, he believes, can be consistent with progress in company earnings.

Within the final 10 years, the S&P BSE has given a modest CAGR return of 10 per cent – from 19,445 ranges in March 2011 to 49,509 ranges in March 2021, Agrawal mentioned. Throughout this era, market has taken crises like demonetisation, the ILFS fiasco and Covid in its stride. Throughout this era, the Indian economic system, in keeping with him, has grown at a CAGR of 4 per cent – from 1.7 trillion in 2010 to 2.6 trillion in 2020E, as in comparison with China that has grown at 10 per cent CAGR to 13.2 trillion in 2020E. By 2029, he expects the Indian economic system to achieve the $5 trillion mark.

Graphic: The highway to 200,000

“Trebling of per capita GDP implies 10x alternative in discretionary and 4x alternative in financial savings and funding companies,” he mentioned.

In addition to Agrawal, another market specialists and pundits have earlier forecast six-figure ranges for the S&P BSE Sensex. Again in 2017, Mark Galasiewski of Elliot Wave Worldwide had reiterated that he expects the S&P BSE Sensex to hit the 100,000 mark by 2024. The index was at 30,750 ranges then. In 2014, Varun Goel, then head of portfolio administration companies at Karvy predicted the S&P BSE Sensex would hit the 100,000 mark by calendar yr 2020 (CY20). READ ABOUT IT HERE

Ace investor Rakesh Jhunjhunwala, too, had referred to as the market rally ‘the mom of all bull run’ some years in the past.

In the meantime, Agrawal of Motilal Oswal means that the federal government now must aggressively divest its holdings in public sector enterprises. The federal government, he mentioned, ought to clear all ‘blockades’ for the divestment course of, deal with job creation and kick-starting progress.

Covid, he believes, is now a ‘recognized beast’ with vaccination marking the start of the tip of the pandemic. He expects a Ok-shaped restoration the place bigger companies will get better quicker from the affect of the pandemic.

Funding technique

As an funding technique, Agrawal suggests traders go for ‘worth migration’, the place worth (i.e. earnings & market-cap) migrates from outmoded enterprise design to superior enterprise design. Worth migration, he believed, creates an enormous alternative for sectors that see worth influx.

Telecom, data know-how (IT), non-public banks, non-public life insurance coverage, in keeping with him are those to wager on.

The opposite theme he’s bullish on are the ‘open-up performs’ – i.e. the sectors that can profit from the economic system opening up after the Covid affect. These sectors, he believes, are prone to see pent-up demand get launched. These embody autos, shopper durables, paints and selective industrials.