The atmosphere is a bit gloomy due to the recent fall in the stock markets. On the other hand, Russia and Ukraine crisis have increased the concern. But, sooner or later this worry will end. Then, things will normalize in the stock markets. Looking at the long term performance of the stock market in India, you need not worry. Let us know why.
Indian stock markets have given 12 per cent returns in the long term. Here, the economy is recovering rapidly due to the Corona epidemic. The growth rate is expected to be excellent in FY 2021-22 and FY 2022-23. In such a situation, the target of 1,00,000 mark of the Sensex does not look difficult. Recently, Christopher Wood of Jefferies had predicted the Sensex to reach the level of 1 lakh by 2026.
Most of the guesswork has a psychology attached to it. This means that people make their own opinion about the good or bad performance of the market depending on the market environment at the time of prediction. If the market is falling, then such predictions are often seen as to where the Sensex will fall. If the market is going up then we see a prediction of the Sensex reaching 1 lakh.
Take the example of Glassman and Hassett. When he gave his predictions in 1998-99, the US market was in a boom. Shares of technology companies were sky high. Experts were telling that no one can stop the market from rising. Then the Dow Jones was expected to reach the 36,000 mark. But, the stock market doesn’t care what you think. He goes at his own pace. Instead of rising, the Dow Jones fell from 11,000 in 2000 to 8,000 in 2003. And the predictions turned out to be completely wrong.
Now let’s talk about Chris Wood’s prediction. He had told when the Sensex would reach 60,000. But, wait..what if the Sensex had a peak of 60,000? What if the Ukraine-Russia crisis escalates the way it was in 2000 for the Dow at 11,000 peak? If the Sensex falls by another 10 percent, it comes to 50,000. Doesn’t it seem possible?
Now if by 2027 you are looking at the Sensex at 1,00,000, then the annual growth of the stock markets should be 15 percent. What if it falls further down to 45,000? Then it would have to show a growth of 18 per cent every year to meet the 100,000 mark prediction. And what if another pandemic strikes, another war begins, the tech bubble starts all over again, something we haven’t seen in years? Then there will be a sharp drop in the market. So there are many buts in it.
We are presenting some more facts for you to think about.
The Sensex had reached 21,000 in 2008. In 2022 it reached 60,000. Don’t you like this wonderful bounce? Are you regretting the missed investment opportunity? But, if we look at the percentage, it is only a growth of 7.7 percent annually. Isn’t this shocking?
So, we just want to tell you that you should not run after these golden predictions. Sensex will reach Rs 1,00,000. We just don’t know when.
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