Sensex will definitely reach 100000. This is like saying " you will die one day".
"When will sensex reach 100000? ", this question has been lingering in my mind for quite some time now.
When I was reading this article in business standard, this morning, the following sentence caught my attention.
“We believe equities will likely be the best performing asset class in the coming decade for domestic investors. We expect the BSE Sensex to deliver annual returns of 14 per cent over the next 10 years, based on our residual income model,” Morgan Stanley says.
Based on the above , I did a linear calculation which is presented below.
Assumption 1:- Sensex levels of 27500 for 2015 (dont ask me "how", I just assumed the current levels)
Assumption 2:- Sensex level will grow 14% year on year in a linear fashion- (linear growth is not going to be a reality - we know about volatility, average return, standard deviation, etc )
| Year | Sensex |
| 2015 | 27500 |
| 2016 | 31350 |
| 2017 | 35739 |
| 2018 | 40742 |
| 2019 | 46446 |
| 2020 | 52949 |
| 2021 | 60362 |
| 2022 | 68812 |
| 2023 | 78446 |
| 2024 | 89429 |
| 2025 | 101949 |
So, by this calculation you can expect sensex to be at 100000 in another 10 years . But looking at the current trend of EPS growth, 14% pa growth may remain a dream.
on the other hand, if growth picks up , we may reach there faster (irrational exuberance!!).
In short, no one knows the correct answer!
Disclaimer:- This post is not intended to advise anyone to invest in equities.Look at it only from an academic/ entertainment perspective.
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