Yes, I asked Ridham Desai, the Head of India Equity Research and India Equity Strategist at Morgan Stanley- “Will You Hold on to Your Sensex Prediction of 100000?”.
He said “Yes”.
This was the question:
Will be interesting to hear @rndx1 Ridham Desai and his views for 2018 equity markets. Will you hold your 100K number? #PrincipalMF @MorganStanley
— Madhupam Krishna CFP, SEBI RIA (@madhupam) January 8, 2018
Want to check his answer? Just click the 2 min video below and you can see for yourself.
You can hear my name with the question & the answer.
I am not a market forecaster or go by market levels. This, means for me market levels are the second thing as priority is fundamentals & disciplined investing. For us, it is participation which is important because you cannot make money by talking about markets, you need to participate.
And, really I see people not participating in for days & years spending time discussing, fearing & timing.
Hence we focus on what we can control. And, certainly market levels – we cannot control.
The background of the 100000 Sensex Forecast Question
(Click to see & listen what Ridham Desai said when I asked about his 100000 Sensex Prediction)
I came to know that Ridham Desai will be addressing a conference in Mumbai on Jan 08, 2018 at BSE. He is or his organization is behind the famous report ‘India’s digital leap – The multi-trillion-dollar opportunity’ released in September 2017 end.
This report predicted Sensex to cross 100000 marks in 2028!!!
Amazing way to get media, investors & everyone’s eyeballs.
The answer to Sensex Prediction to achieve 100000 mark
As you can listen, he said – Yes.
According to him, there are 2 justifications for it:
- Growth: The report is based on how India is growing backed by 3 famous disruptive These are called JAM. Jandhan, Aadhar & Mobile revolution. Based on earnings turnaround and future growth of your country, the number 100000 in 10 years looks a possibility.
- Simple Mathematics: As you can watch in the video, he says “ if markets were to growth from present level at 12% compounding, it will cross 100000.
Simple statistic of 3 times approximately in 10 years.
Is this Sensex Prediction possible?
It has already happened many times. You will enjoy this even if you don’t like maths.
The Sensex has moved from 3,500 in 2002 to 35,000 in 2018.
This means Sensex moved up 10 times in 16 years.
Sensex has moved from 8000 in 2008 to 35,000 in 2018.
Also, the index has moved up approximately 4 times in the last 10 years.
But you remember only the bad days because the ride was bumpy:
But investors who invested in Sensex managed to compound their returns at about 15% per annum.
Questions will remain bothering us like:
Will the earnings growth of Indian companies catch up?
- Can the current valuations sustain?
- Will the earnings rise?
- Will the market’s liquidity be same after US interest rates rise?
But as I said, “These factors WE CANNOT CONTROL”.
Now, what are the probabilities of 12% returns?
For this, we need to critically examine the past data and combine it with present information.
So here is the history when Sensex made over 15% in a particular calendar year from 1980 to 2017 (37 years).
Markets or equity do not work on “yearly basis”. Means they do not know dates or calendar like debt instruments have. Equity-only knows cycles.
So when you talk about 10 years, you know you are talking about perhaps 1-2 cycles and not 1 to 10 year.
So calendar year does not seem like a good estimate. Let’s also take a look at the rolling return of Sensex for different holding periods. The below table shows daily rolling returns calculated for Sensex since its inception i.e 2nd January 1980 until October 2017.
In the past 37 years, we have witnessed many negative as well as positive events which were both global and local.
We have a tendency to understate the positive and overstate the negative when it comes to the stock markets. (Look how entire social media is busy cursing PNB scam nowadays)
So I am confident of fact that stock markets are long-term wealth creators.
Essentially time is important and not timing.
Though it was fun asking Ridham Desai about the surety of his Sensex Prediction.
Share your views and this article. I hope you liked the message.
