Sensex closed at 28,693.99 up 255 points or 0.90 per cent. It touched a record high of 28,822.37 and a low of 28,483.99 in trade today.
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NEW DELHI: The Indian stock market created history on Friday as the total investor wealth hit a record high of Rs 100 trillion in trade on the BSE, which also puts it among the ten largest exchanges of the world in terms of total market capitalisation of listed firms.
The BSE closed with a total market capitalization of Rs 99.76 trillion, just a shy away from the Rs 100-trillion mark, which it hit earlier in trade today. However, the rally is still not over yet as experts see this figure doubling in the next 3-5 years.
The S&P BSE Sensex closed at 28,693.99, up 255 points or 0.90 per cent. It touched a record high of 28,822.37 and a low of 28,483.99 in trade today.
The S&P BSE Sensex, which has already rallied over 36 per cent so far in the year 2014 to hit record levels above 28000, has outperformed emerging market peers as well as indices across the world on YTD and 1-year basis.
“Already the markets have surged over 36 per cent year to date, and if we can take 20 per cent as the annual growth figure over the next 4 years, you will see the markets doubling in 4 years,” says Raghu Kumar, cofounder, RKSV. “This is definitely doable if investor confidence remains high, both domestically and from FIIs,” he adds.
Considering the overall situation of falling crude prices and control over domestic inflation, analysts predict a strong growth in earnings in the coming quarters which will give further boost to the markets. So the rally is here to stay!
“We are asking investors to put in more money because the good news is just beginning in the sense that for the first half we have some improvement in the economic activity and growth. But things will move the way they are if the economy picks up to 6.5%-7% and the corporate earnings grow at about 17 to 18% for the next two to three years,” says Dhirendra Tiwari, Head of Research, Antique Stock Broking.
“The Indian market still is very reasonably priced, I would say 16 times or 17 times, depending on the earning estimates, which is somewhere in between the peak and the bottom. So I would assume that if you look at the market per se, there is a meaningful upside left in the next 12 to 15 months. There of course would be volatility in between,” he adds.
A change in government has altered the perception about the Indian market among global fund managers. They feel India’s medium to long-term growth trend is premised on the inter-play of the structurally positive factors of demographics, reforms and globalisation.
India GDP growth appears to have bottomed out and will gradually recover with the implementation of various pro-growth policies by the Modi-led government.
The stellar run that we have seen in the market is also due to the fact that India has managed to keep its macros in check compared to other Ems, which helped in attracting more capital.
Asia-Pacific economies are losing momentum as they approach the finish line in 2014, but India is bucking the trend, global rating firm S&P said in a note.
India has been the bright spot in Asia-Pacific, said S&P in a note released on Wednesday, adding that after a cautious start, the Modi government has picked up the pace of reform.
The Indian equity markets are currently buoyant and there is still plenty of room for a sustained bull-run on the back of improving fundamentals and a focused new government at hand that is intent on formulation of pro-economic growth policies.
“Given these catalysts, one can reasonably expect market levels and hence stock prices to soar in the next 3-5 years. Share price appreciation (holding capital structures constant) translates to a corresponding growth in market capitalization,” says Vikas V Gupta - Executive Vice President, Traded Markets & Investment Research, ArthVeda Fund Management Pvt. Ltd.
“Factoring in all of the above, we can estimate a robust growth in the BSE Sensex market cap reaching the Rs 200-lakh crore mark in the next 3 years and the Rs 315-lakh crore mark in the next 5 years,” he adds.
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