BSE Sensex Target 100,000 – When & How ?
May 9, 2010
I am pretty sure that you are calling me insane of giving a 100,000 / 1 Lakh Target for BSE Sensex. Well, it isn’t me but Chris Roberts of Mizuho Securities Asia Limited from Hong Kong. Chris in his report said that,
Our roadmap on India sees the April 1992 through September 2001 period as a completed secular bear market. From the 1992 low of 2,595, we expect a large five-wave advance to form, given that we have only completed waves i and ii of that move we see considerably more upward scope and if our interpretation is correct then the Sensex (last 17,473) should eventually exceed the 100,000 level. Some patience will be required before we witness strong, consistent gains, 2010 will be mostly about partially correcting some of the 134% (as at the recent high of 18,048) gained from the November 2008 low of 7,697. We’re expecting the index to grind out some further gains in wave 1 before the wave 2 decline gets underway.
Check out the following chart which is Chris’ justification of 100,000 target on the Sensex.
From the Graph Above, Data suggests that BSE Sensex will cross 100,000 in the next 11 years. Can the BSE Sensex hit 100,000 within the next 11 years ? Lets have a look at 100,000 target w.r.t fundamentals. If Sensex quotes at Historical expanded P/E of 18 at 100,000, Sensex earnings should have reached 5,550 from the current level of Rs 1,000. That means Sensex earnings have to grow 17% YoY for the next 11 years 🙂 Do you think it is possible with all the Macro Factors ?