Not been writing for past many months. Here’s what used to happen whenever I planned to write. I used to look at my last post and the posts prior to that and I felt that there is still no change in any of my estimates.Calling a Bottom (Jan’09)
Sensex 8000 to 80000: No change in my estimates of March '08 (Jan ‘09)
Sensex 10K in one year and 80 K in eight years (March ‘08)
So I used to decide not to write.
Anyways, at the risk of being repetitive, let me share my thoughts on the markets.
The 7 year bull run begins
What we are witnessing are the very beginnings of a bull run, which I expect to run up to 80000 Sensex (minimum 60000 Sensex) by 2016.
These are per my estimates made in early 2008 (when Sensex had just dropped from its peak of 21K ) , where I expected the Sensex to slide to sub 10000 and then go up to 80000 levels.
Though the Indices have risen more than 100% from their 2009 lows, but in my opinion this is just the base for the next bull run.
Quite a few folks are feeling left out thinking that the markets have already gone up by 100%. But here’s the deal- the markets are going to go up by 4 to 5 times from the current level. So you have not missed the bus, but in fact the bus has just started.
Very similar thing happened in the previous bull run which began when the Sensex was at sub 3000 levels in 2003. It then doubled to 6000+ in less than a year’s time by 2004 end. Then it doubled again to 12000+ within two year (towards end of 2006) and kept going up to 15000 in next six months (middle of 2007). And lots of investors (retails as well as institutional) started to pour a phenomenal amounts in a lot of money thinking that they had missed the bus. That’s irrational exuberance piece that took the index to 21000. We have a long way to go in the current bull run before irrational exuberance kicks in.
I believe that the index is going to rise many times over, because the India growth story now is better than it was in 2003. This is the time to keep accumulating stocks.
Drivers for the 7 year bull run
Here’s what I feel would be driving the bull run:-
- India will continue to grow at a rate of 7% to 10% (or even higher) over the next decade. This will be far higher than the rate of growth of developed economies (approx 2.5%) but less than China’s expected growth rate (above 10%)
- The growth will be driven by a large rise in domestic consumption, an increasing tendency of retail consumers towards debt and continuing growth in outsourcing to India in the space of Manufacturing , Services and Technology.
- Government will continue with its investment and business friendly measures and will continue liberalizing the economy.