In my previous post on Nifty
written on 22nd Feb 2017, I wrote, “ Since then Nifty is
up by almost 10% in last three months. As I have mentioned in my previous post
I expect Nifty to perform spectacularly well in next two years. I won’t be
surprised if I see Nifty breaching 10600 – 11000 by the end of current year.”
In another post written on 6th September 2016, I
wrote, “We may
consolidate between 8000 – 9500 for next year or so before we finally break out
of this zone and we have a bull market which will take nifty to 14000 -15000
levels by the end of 2020.”
As per last Fridays closing
Sensex is already trading at 31000 looks unstoppable. If we look at the given
chart of Index we can see that Sensex has been trading a sideways channel since
2005. It is again near the resistance line, so either of the two things will
happen:
1.
Sensex will face resistance at the channel and
will correct from current levels
2.
Sensex will break the resistance line and we
will see a bull market unfolding in India, something similar to 1988 -1992
where Sensex moved from 400 to 4000 and 2003 - 2007 where Sensex moved from
3000 to 21000
My regular readers would be aware
that I have been calling for a long term bull market in India near the end of
this decade.
In my post written on 30th November 2010, I wrote, “This is my preferred scenario where
market will move side side ways between a range of 24000 - 12000 for next five
years before it eventually breaks above the channel line and reaches 45,000 by
the end of this decade.”
In another post written on 16th may 2014, I wrote, “If we look at the
given chart of Sensex, it made a high of 25375 and had hit the upper end of the
channel. I am not expecting a breakout of this channel anytime soon. As
per my understanding market should spend considerable time consolidating at
these levels before they finally decide to break out. Any breakout of this
channel will result into index moving up to 45000 to 60,000 in next 5- 7 years.”
If we look at the given chart of Sensex, I think
time has come for it to break above the resistance level. I believe that Indian
markets have the potential to double from the current levels in next 4 – 5 years
on the conservative side. I won’t be surprised even if I see trebling of Index
in next 5 – 7 years.
I know that the immediate
question in your mind would be about the valuations which looks stretched at
this point in time. So let us look at the EPS growth chart of Sensex. From 2001
to 2008 EPS growth was around 28% CAGR while from 2008 – 2017 EPS growth has
been 4%. I believe that we will see massive EPS expansion going forward which
will enable the Index to grow at 15% – 20% CAGR
Summary:-
1.
The bull market in India has just started, target
for nifty is around 15000 – 18000 in next 5 years
2.
EPS
expansion will happen.
4.
All credit
for this bull market goes to the current NaMo govt and their economic policies
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