NIFTY At 125000 by 2030. Is It Possible?
by Mr. GOPALAKRISHNAN V, MONEY AVENUES
Ace investor Mr. Rakesh Jhunjunwala puts the NIFTY target in the year
2030 at a whopping 125000 points. And currently NIFTY is trading at
about 8500 levels. Translating it to SENSEX, it will be anywhere above
400000 going by the current ratio of SENSEX to NIFTY.
Looked at plainly, it looks like a daunting and fatty figure, to say the least. But look at this way – if the figure is broken down in simple math, he talks about a CAGR (Compounded Annual Growth Rate) of + 20 % over the next 16 years.
Is it impossible?
The answer is, it is not impossible to achieve. Is it easily achievable? Definitely not easily achievable.
Why it is not impossible to achieve?
The reasons are here…
Why it is not easy?
Simple: Nifty has grown to 8500 levels after more than 18 years since the existence on a base of 1000 points. A growth of just above CAGR 12.5% since 1996. The past record does not corroborate the future target of CAGR 20% over next 16 years or so.
Governance has been a serious issue over the last 10 years or so: In India, we have seen that poor governance has directly and adversely impacted the economy and whenever economy hit the recession, markets too followed suit to hit bottoms. The key challenge before the country and the economy is to have a sustained good governance.
To achieve a sustainably high growth above 7% and corporate earnings of above 20%, country has to have a good governance which is focused on providing policy clarity, promotion of FDI, ensuring fiscal discipline, creation of jobs & many more.
Remember, markets were in doldrums till September0 2013, with Nifty hitting bottom levels of 5200 and quickly reversed and touched all time highs of 8500 levels in 2014. The main reason for that – Change of government at the center.
On the corporates side, what should they do?
Create long term businesses, expand exponentially, handle costs carefully, have debts within responsible limits, create wealth for shareholders and create value for Indian business environment, which will augur well for having more foreign investors through FDI and FII in India.
To sum up, India’s GDP definitely has the scope to grow at 8% to 10% Year OnYear over the next 2 decades and so as the NIFTY touch 125000 levels during the same time.
Good Luck & Happy Investing!!!
Mr. GOPALAKRISHNAN V, FOUNDER & CEO, MONEY AVENUES
Looked at plainly, it looks like a daunting and fatty figure, to say the least. But look at this way – if the figure is broken down in simple math, he talks about a CAGR (Compounded Annual Growth Rate) of + 20 % over the next 16 years.
Is it impossible?
The answer is, it is not impossible to achieve. Is it easily achievable? Definitely not easily achievable.
 |
| Mr. GOPALAKRISHNAN V, MONEY AVENUES |
The reasons are here…
- We are yet to see the best of GDP numbers since the last decade when India last scaled 7 % + of GDP growth in the early 2000s and after which Indian economy hit the slowdown patch over the last many years
- Same is the case with Corporate earnings. Tracking the slowdown in the economy, corporate earnings too slipped consistently.
- Current government is pursuing economic reforms vigorously and If the successive governments pursue the continuity in the economic policy liberalization over the next 2 decades with vigor, India can hit double digit GDP growth and sustain such a growth for a longer period of time.
- That can push up the corporate earnings to the range of 20% to 30% Year on Year and that will be a great news for the stock markets and the investors.
- Indian economy is in a sweet spot when compared to its global peers, mainly US, Euro Zone, China and Japan, which have potentially hit a ceiling, baring China.
- India’s Vibrant demographic advantages, untapped potential for economic growth, vast human resources make the country very attractive for a sustainable long term economic growth.
- Surely, the current government is firing on all cylinders, but the momentum has to catch up and sustain for a longer period of time.
Why it is not easy?
Simple: Nifty has grown to 8500 levels after more than 18 years since the existence on a base of 1000 points. A growth of just above CAGR 12.5% since 1996. The past record does not corroborate the future target of CAGR 20% over next 16 years or so.
Governance has been a serious issue over the last 10 years or so: In India, we have seen that poor governance has directly and adversely impacted the economy and whenever economy hit the recession, markets too followed suit to hit bottoms. The key challenge before the country and the economy is to have a sustained good governance.
To achieve a sustainably high growth above 7% and corporate earnings of above 20%, country has to have a good governance which is focused on providing policy clarity, promotion of FDI, ensuring fiscal discipline, creation of jobs & many more.
Remember, markets were in doldrums till September0 2013, with Nifty hitting bottom levels of 5200 and quickly reversed and touched all time highs of 8500 levels in 2014. The main reason for that – Change of government at the center.
On the corporates side, what should they do?
Create long term businesses, expand exponentially, handle costs carefully, have debts within responsible limits, create wealth for shareholders and create value for Indian business environment, which will augur well for having more foreign investors through FDI and FII in India.
To sum up, India’s GDP definitely has the scope to grow at 8% to 10% Year OnYear over the next 2 decades and so as the NIFTY touch 125000 levels during the same time.
Good Luck & Happy Investing!!!
About the author ..
Mr. GOPALAKRISHNAN V, FOUNDER & CEO, MONEY AVENUES
Src: http://moneyavenues.wordpress.com/2014/12/05/nifty-125000-by-2030/
Mr. Gopalakrishnan V
Principal Financial Planner
Founder & CEO
Money Avenues
+91 90947 95511
Skype: talk2gops
mailvgopal@gmail.com
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