Sensex can hit the 2 lakh mark in the next 10 years, said veteran market expert Raamdeo Agarwal, indicating an annualised growth rate of nearly 15 percent for the BSE frontline index from the current levels. Agrawal, chairman of Motilal Oswal Financial Services, also expects India to be a $5 trillion economy by FY29.
The Indian economy is likely to see 12-13 percent nominal GDP growth, Agrawal said in a note, but, expects the corporate profit growth to be slightly higher than GDP growth during the next decade.
“A 15 percent CAGR growth in profits over the next 10 years will take Sensex to 2,00,000,” Agarwal said.
To put things into perspective, Sensex has returned an annualised growth of nearly 11 percent in the last 10 years while taking major crises such as demonetisation, IL&FS fiasco and the COVID-19 pandemic in its stride.
Motilal Oswal's note also highlighted some favourable variables for the country including India’s well-established federal structure, a huge domestic market dominated by youth, growth in digitisation, strong dollar inflows and huge forex reserves.
Further, declining interest rates and inflation, falling crude oil prices, easing current account deficit with an added advantage of the most stable government in place is also favourable for the Indian economy.
Agrawal said that the COVID-19 is a temporary blip and the vaccination marks the beginning of the end. He expects a K-shaped recovery with larger businesses to recover faster.
Among sectors to watch going ahead, Agrawal advises going for value migration and open-up plays. He sees value migration in IT, private banking and private life insurance space.
Private life insurance is a sunrise sector, he said, adding that there will be a value migration from public to private.
“Value Migration creates a massive opportunity for sectors which see value inflow,” he said.
Post-open-up, he expects sectors with postponed demand should surge. He is positive for sectors like autos, consumer durables, paints and selective industrials.
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