Experts suggest Bull run in market will continue; Sensex could touch 50,000 in next decade

“We believe that the probability of Sensex peaking at 50,000 or more in the current bull market is high. One note of caution is that the Indian market is correlated to global markets, and the global business cycle is maturing,” Vivek Ranjan Misra, Head of Fundamental Research at Karvy Stock Broking told Moneycontrol.

“The probability of a global recession in 2020 cannot be dismissed and thus some caution would be warranted by mid-2020,” he said.

Dipan Mehta, Director, Elixir Equities is of the view that foundation is being set for the next leg of this multi-year bull market. “We should see 50K on the Sensex in the next decade and maybe even 1,00,000 before 2030,” he said.

Near-term challenges:

Apart from global concerns with respect to growth, on the domestic front, at least in the near-term, there are lingering concerns about upcoming elections that have put investors in a fix.

Mutual fund data of past month suggests that retail investors are on sidelines as inflows into equity mutual funds fell to a 25-month low in February.

But, it is not the time to slow down your investments into funds or into market because the liquidity rush from foreign investors is supporting the bull market rally, suggest experts.

And, the optimism is not based on elections or one particular government resuming power, but it is more fundamental in nature.

Ahead of the elections, foreign investors have developed an appetite for Indian equities. FIIs bought equities worth over Rs 20,000 crore so far in 2019.

"Indian equity market continued its positive momentum with both mid and small-cap stocks being the biggest gainers. Reduced geopolitical tension, a possibility of stable government, strengthening rupee and recent FII buying has supported the turnaround in the market," Siddhartha Khemka, Head of Retail Research, MOFSL told Moneycontrol.

"The Indian economy and earnings are improving as we step into FY20. We also expect the RBI to cut rates further in its April policy meeting. Our analysis of fundamentals and valuations for midcaps and comparison of mid-caps versus large-caps on several frontiers suggest that the relative attractiveness of midcaps has gone up," he said.

Data suggests that the Indian market is not dependent on which political party is ruling at the Centre. The BSE-30 index increased 305x over the period of January 1, 1980 to December 31, 2018, according to Quantum Mutual Fund a note.

“The returns of the BSE-30 Index are completely independent of which kind of government is in power. The highest returns from the BSE-30 index have been under coalition governments - and the lowest returns also under coalition governments,” the note added.

“But, it is also true that under three of the four single party governments, the rate of return on the BSE-30 index has grown more than the 39-year average of 19.3 percent,” it said.

The equity team at Quantum firmly believes that India is a long-term growth story and continues to pick stocks using the deliberate investment philosophy - irrespective of who is in power.

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