Saturday, January 1, 2011

BSE Sensex to cross 29,000 and NSE Nifty to cross 8700 by....

As the year closes, everybody wants to review the going year and builds up new hopes for the coming new year.
We at Smart VERC are happy to report that we have crossed several milestones in the current year and hope for the more to come in the next year.
During the decade of Eighties our average GDP growth was about 4%, next decade the growth increased to 5%, subsequently we grew at a faster pace of 6.75% and for the next 10 years we are confident of growing at the rate of no less than 10%. It is the fast increase in rate of growth which has propelled stock indices to new highs. We do not see any bubble building up, as of now.

Being conservative, we have assumed a lower growth of just 8% for the projections of next two years !. If the past trend is anything to go-by, the GDP growth has direct correlation with Corporate bottom-line and the multiplication factor is Three. Thus one can safely assume the corporate profits to grow at the rate of 24% for the next two years (based on 8% GDP growth rate).
Assuming the current P/E ratio is sustainable for the next two years (which is very much possible) the BSE Sensitive Index and NSE NIFTY are likely to reach 29,000 and 8700 by 2012 end.

These figures may appear bit un-realistic now but the assumptions are realistic one and we are confident that these levels shall be achieved.
Are you prepared to derive maximum advantage from these gains !

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