When I wrote the below article few months back, many were saying
Indian markets expensive. The SENSEX was at 15000 levels. Now SENSEX
did 30% from those levels and crossed 20000 for a short while and now
trading around 8% lower from the peak at 18750 levels.
The PE for the SENSEX should be now around 23 times now ( I have not
calculated the exact value). The SENSEX stocks are bound to grow at
least 25-30% cumulative for next 3 years (I here advance tax
collection up by 40%). This will take the SENSEX EPS to 1600 – 1800
range.
Taking a low PE of 20, SENSEX should at least see 32000 mark. Taking a
higher PE of 23 times on a higher growth and higher EPS target, SENSEX
should see 41000 mark. This target is for next 3 years.
Investors are recommended to stay invested.
Author: Ananda Kumar. Join
www.winfromus.com , the premium stock advice service.
The SENSEX ( The sensitive index of Bombay stock exchange)
closed today at 15300 points (almost near 52 week high) up from 10149
(almost near 52 week low) a year back. A whopping 50%. If you look at
the dolex 30 52 week high of 3119 and 52 week low of 1729, dollarwise
returns are almost unbelievable 80%.
Indian stock markets are in this dream run because of the effects of
FII investments, increasing corporate earnings and realisation of
better valuations by Indian companies.
BHARTI TELEVENTURES gave 126%, HDFC gave 80%, ICICI BANK gave 96%,
LARSEN & TOUBRO gave 96%, STATE BANK OF INDIA gave 110%, RELIANCE
COMMUNICATIONS gave 108% returns during this period.
9 stocks gave negative returns versus 21 stocks which gave positive returns.
The PE Ratio of the sensex currently stands at 20.5 times. During
september 2006 when SENSEX was at around 12000 points the PE Ratio was
at 20.75.
This means that the Indian markets are as attractive as it was in
September 2006.
I predict a 35% returns on SENSEX in the coming 1 year.
Indian Stocks market is showing strength from strength and is making steady gains over last few years. SENSEX and NIFTY are less than 5% below the all time highs.
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