Where the indian stock market is headed? - 05th March 2005.:
As per the this analysis, the SENSEX is trading at around 16 PE multiples. That means Earnings stand at 6700/16 = approx 415 points. At the current growth rate of 30% in net profits, we should see Earnings of 540 and 700 points. This discounts the current SENSEX by less than 10 times.
As a emerging economy India deserves a PE of atleast 15 which places the sesex above 10,000 points in the year 2007.
If you are looking at long time story and not at short term trends, invest in strong A and B1 group stocks with low PE multiples and growth in net profits in last 3 years at least.
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