Dalal Street’s present rally could possibly be just the starting of a multi-year enormous-bull run, which could take the S&P BSE Sensex to 200,000 points in the next 10 years, stated Raamdeo Agrawal, Chairman and Co-founder, Motilal Oswal Financial Services. The stock market place veteran added that India has seen steady financial development more than the last couple of years and crucial indicators such as democracy, demography, digitisation, dollar reserves, and a steady government are currently favourable towards India. The 200,000 target for Sensex in 10 years is almost 4 occasions the present 51,000 levels of the index. Quick calculation shows that this is about 15% CAGR.
What would support Sensex?
Strong economy to help index: Raamdeo Agrawal has listed down a series of components that he believes will help India going ahead. The principal catalyst to attain the 200,000 mark is seen to be a robust economy that sees 12-13% nominal GDP development. He pegs the actual development to be in the variety of 7-8% and inflation about 4-5%. “Trebling of per capita GDP implies 10x opportunity in discretionary & 4x opportunity in savings & investment services,” Raamdeo Agrawal stated.
Corporate income anticipated to surge: For Sensex to scale 2,00,000, Raamdeo Agrawal expects corporate profit development to be slightly larger than GDP development. He estimates that corporate income will develop at 15% CAGR.
Market development in line: Dalal Street is anticipated to move in line with development in corporate income. This implies a 15% CAGR, taking Sensex up 4 occasions in the next decade.
Democracy, Demography: India’s robust democracy and properly established federal structure are also seen as enablers in this anticipated development. To add to that, India’s youth dominated population is anticipated to move into the upper-middle-class category by 2030.
Sectors to watch out
In terms of trades that could be favoured more than the next decade, complimenting Sensex development, Raamdeo Agrawal is betting on worth migration and open-up plays. Among the top rated bets is the Information Technology sector. The report says that India has a international competitive benefit in the sector and a extended digitalization runway ahead. The IT sector has a 27% share in India Inc’s net income and a 12.4% share in market place capitalization.
Further, the anticipated move away from public sector banks to private sector lenders has made the latter a different bet favoured by Raamdeo Agrawal. The private life insurance coverage sector is a different beneficiary of the exact same public to private migration. Among other sectors that Raamdeo Agrawal lists incorporate autos, customer durables, paints, and selective industrials.
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