Can SENSEX ever touch 1,00,000 !!! ???

A fancy question for most of us !! especially when market is on a roller coaster ride these days. BSE (Bombay stock exchange) benchmark and SENSEX(Stock Exchange Sensitive Index) have become common words in day to day life. So Can SENSEX ever touch 1,00,000? The question somehow came to my mind yesterday evening as so much is being talked about the economy, FDI, market and growth so, I decided to research about it.

To find out the answer I went to my favourite book Google. After doing a bit of research I was ready with the conclusion, and the answer is YES, SENSEX can touch 1,00,000. Now the next question could be When? Let's talk about the answer.

While going through different pages, I came to know that I wasn't the only one with this question, as it has already made headlines on the leading business publications of the country, in the first week of June'14. The speculations started due to a report by Karvy Stock Broking, which stated that the SENSEX could touch the fancy figure of 1,00,000 by 2020. Well, I personally partially agree with the statement, maybe because the report is a bit older for me.

Let's get down to our question:

To understand the answer, first we have to understand what is SENSEX and how does it work?

The SENSEX is nothing but a weighted indicator of the prices of 30 big Indian companies, listed on BSE, The companies are some of the largest and most actively traded stocks and representative of various industrial sectors of the Indian economy.

If the stock prices of these 30 companies will rise, the SENSEX will rise, keeping in mind that these companies represent the whole of India, we would say the value of the Indian market will rise. 

Now, How or Why would the stock prices of these 30 companies will rise?

Companies manufacture goods or the services companies provide different types of services through their products and in return they earn a profit. Companies reinvest this profit into its expansion and acquiring new platforms in order to increase its revenue and reach. The stock price of any company describes the value of the company. As the process continues, in the long run, company's business expands, it's revenue increases and it earns more profit. The value of the company increases and hence the price of the stock will increase because more and more people will buy shares of that company and more investors will invest in this company.

As a matter of fact, from a low of 7,697 in October 2008, SENSEX tripled to its current 25,000, in less than 6 years, and that too when the economy was facing one of its worst times. I can personally predict the SENSEX to reach 1,00,000 before 2025. Which means an annual increase of 7500 points per fiscal year, i.e. On an average 15% increase annually. With a bit of more research I found out that, It has happened before in US.  Share prices have jumped 25% every year in global markets in the past. The US Dow Jones Industrial Average experienced its most spectacular rise in 1980s after a slowdown. "From a mere 777 on August 12, 1982, the index grew more than 1,500% to close at 11,722.98 by January 14, 2000."

But to achieve such a number, Indian Government has to play an important role. With it's first budget, Modi government gave clear indication to boost production and infrastructural development in the country, as weak infrastructure and poor policies have always fed the bear in India. Government has to speed up the process of project clearances in order to invite investors. Government has to provide a healthy environment for the investors. So far in 2015, India has gained FDI of around 31 Billion Dollars, surpassing China & even USA. This shows how bullish globally investors are on India.

Achieving such high growth of 15% in the next few years shouldn’t be difficult for the SENSEX, but sustaining it over a longer period will not be easy. Hope the government will take the right steps and help the SENSEX to achieve this glamorous number.

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