Sensex of 100 becomes 66000 in 44 years

Sensex of 100 in 1979 becomes 66000 in 2023 in 44 years

CAGR of 15.9% if Continued in Sensex, it should ideally reach 100000 in 3 years. and accordingly GDP in 44 years has increased from 152BUSD to 3500B showing CAGR of 7.39%. Crude has averaged 77 in last 20 years. 

Buffet Ratio of 97% now with highest of 119 and lowest of 51% shows that the scope is range bound.

Historically Annualised returns predicted has been 8-8% based on Buffet Ratio whereas the actual returns have been higher. It in away proves the barometer theory and practically establishes the fact that CAGR growth of GDP and Sensex along with Market Cap and Central Bank Reserves have a direct correlation.

Inflation and Interest Rates accordingly are a combination of Demand Supply, GDP growth, Inflows, Reserves , Market Cap and hence currency depreciation too.

On 20th it was analysed and shared that 65000 is the support ..meaning chances of falling to this level and it was shared that for 7-15 days it will be 66750-67500..for 7 days it remained in the range …

Bouncing of back of Sensex as shared will take time of 60 days  approx. impact of negative news on few sectors, escalation of war, profit booking, last days of options 27th July, made it a subdued under pressure scenario.

Undercurrent and positive upside is there. 

As barometer, Our economy has crossed almost 25% on nominal basis to 3 Trillion mark and Sensex also has jumped by 25% approx in past 2 years and returns too accordingly.

For this to have next impact  to 5T how much time it will take - 5 years ? 

Accordingly we should expect 7-15% upside and stagnation at 75000 or 75000-85000 with Buffet Ratio of 95-105%. Considering Beta of 2X as multiple of CAGR of GDP and Sensex is double, shows the fact that there is every possibility of Sensex growing between 10-15% considering India Story has another 10-15 years of stagnation period.

There is every reason for the Sensex to Stabilise and grow at a lesser pace and any Geo Political and Currency Related impacts can hamper India Growth. 

Specific stocks  of renewable energy , defence, food agri sector, Entertainment , selective Pharma stocks, Some revival listed and under OTS stocks can be mukti-baggers 

Unlike US where new companies emerge and hit the Top list, in India Bigger groups have the key and lock and trust with them. They continue to lead the pack and shall again continue to be there except the new comers and new industries and even the new comers as unicorns are getting sold to the existing big ones, the point here is that the 5 T USD economy will have someone to bear and reflect the major growth.

Just to repeat Kalyani, Bharat Forge, M&M, Reliance, TATA, Adani, Dalmia, Coal India, Jubiliant, Refineries, Auto OEM, Automobile, Steel, Real Estate, Selective large Infra and Road companies, Large Hospitals, Labs are the best bet for medium to long term as almost 10 crore families are expected to be reached and brought into mainstream in next 10 years- if Government continues with its programme.

FDI and capital formation is shifting to India post Covid and Transactions through UPI, RTgS, NEFt is leading to stronger MSME and balance sheet of MSME is now visible which was not earlier.

GST collection and higher savings rate is leading to stronger liquidity and reduced defaults. Banking consolidation, reduced loaning, reduced capital formation and improved retail loans growth has led to better rating of banks. India accordingly is poised for a better position to take bigger projects.

Petrodollar and regional currencies and bilateral trade without dollars is a must of future and may be a push to converting 50% of cash into Digital coins in next 10 years is very much possible.

This will eventually shift the Dollar Indexing and hence may be slowly a challenge to a Singke Currency Rule of world and world making US to remain Leader may get affected for which a War and fear from the side of US is must to remain leader. It happens now or in a year or two is to be seen or the world again gives up and china, Russia, India fall in line is to be seen.

Food for thought ! Happy Investing

Dinesh Goel

Personal views with natural and financial disclaimers