NIFTY 50 -50K?
Back in beginning of the ongoing pandemic, seeing the nifty and sensex levels, who would have thought that sensex would cross 50000?
Can same thing happen with NIFTY 50?
IN APRIL 2003 NIFTY was trading below the level of 1000 & It went up to level of 6000+ in the year 2007. In that time period, SENSEX culminated FROM 3000-20000 & same with NIFTY from 950-6000.
The returns just got 7x IN just 5 YEARS which was the dream run for the INDIAN STOCK MARKETS! AND yes this phenomenon IS technically possible and called as BULL MARKET RALLY.
Considering IN CURRNET Scenario, like a SIMILER BULL MARKET for coming 5 YEARS …WHY IT CAN’T GIVE 3x -4x RETUNS?
Comparing current NIFTY levels of 14500 IT might GIVE 4x RETUNS which CAN TAKE NIFTY TO 50K (of course the expected level has considered all corporate actions in the calculations)
Let’s play with numbers now!
NIFTY PE CHART
Back in 2003, NIFTY PE was around 20 & in 2007 it was around 26.
From 20 PE TO 26 it was only 30% INCREASE IN NIFTY PE!
The BULL rally had 2 things on watchlist :
- PE Expanded
- EPS increased!
During 2003-2007 INDIAN ECONOMIC CYCLE was in LOW INTERST RATE REGION.
Generally, THERE ARE TWO INTEREST CYCLE IS IN ECONOMY FIRST IS HIGH INTERST CYCLE & LOW INTERST CYCLE.
Typically, in LOW INTEREST RATE CYCLE MONEY Is pumped into STOCK MARKET & IN HIGH INTEREST RATE CYCLE MONEY WILL FLOWING out STOCK MARKET TO BANKS IN FIXED INSTRUMENTS.
WHEN INTEREST RATES GOES DOWN, PE Expands SO IN COMING YEARS INDIAN ECONOMY might GO into LOW INTEREST rate phase indicating boom in benchmark indexes.
IN GOOD ECONOMY WE CAN ALSO EXPECT GOOD GROWTH FOR COMPANIES THAT’S AFFECT ON COMPANIES EPS.
IT, PHARMA, AUTO SECTORS MAY BE LEADERS IN COMING BULL RALLY AS We’ve seen CRASH DUE TO PANDEMIC. Indian vaccine drive and foreign inflow makes it difficult to predict new market top in coming period.
Currently, DATA FROM LAST 10 MONTH MARKET ONLY SHOWS US THE TRAILER OF INDIAN MARKETS ASLI PICURE TO BAKI HAI MERE DOST!