The Steady March Upwards of Sensex 30 Firms'
Profits
Talking about a 70% surge in the benchmark index, here's a
great illustration of the how in the long run, the underlying earnings of
companies steadily march upwards .
The aggregate consolidated
net profits of BSE Sensex 30 companies
since 1999-2000. (FY00)
Put this way, you can
clearly see how phenomenal this growth can look like over a large number of
years.
The total profits of Sensex
companies in FY00 was just Rs. 175 billion. This figure today stands at a grand
Rs. 2.37 trillion. This, even after the sluggishness in business of the last
few years has ensured that earnings have remained stubbornly stagnant in the
last few years. This effect too can amply be seen in the chart.
Looking beyond the current down cycle, as corporate earnings rise over the years, so will stock prices. Indeed, a surge in the Sensex is just a matter of time.
Looking beyond the current down cycle, as corporate earnings rise over the years, so will stock prices. Indeed, a surge in the Sensex is just a matter of time.
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