Raamdeo Agrawal’s forecast: Indian market to double in 5 years, quadruple in 10

Raamdeo Agrawal, Chairman and Co-founder of Motilal Oswal Financial Services

Raamdeo Agrawal, Chairman and Co-founder of Motilal Oswal Financial Services, made a bold prediction at the Business Standard BFSI Insight Summit, suggesting that the Indian markets may double in the next five years and quadruple in the following decade.

"India is in a different cycle right now where we are seeing corporate upgrades. The aggregate earnings of India Inc for Q2FY24 have exceeded expectations, growing by 32 percent, as opposed to the anticipated 26 percent. India is on a roll. The index can double in the next five years and surge fourfold in ten years," he said.

On September 15, 2023, the S&P BSE Sensex reached a record high of 67,927, while the Nifty50 touched 20,222 levels. Nevertheless, a subsequent drop in US Treasury yields and an unexpected conflict in West Asia led to a nearly 6 percent decline in the index. He further pointed out that investors are not factoring in net profit growth in the coming quarters, thus ignoring emphasizing on the importance of considering corporate earnings.

Savings potential

Agrawal believes that equities are the way forward for Indian investors, citing India's substantial savings potential and the growing number of demat accounts. "India is sitting on total savings worth $10-12 trillion, which could grow to $100-150 trillion in 25 years. So, markets are sitting on a tsunami of savings, " he said. Also, with India seeing an addition of three million dematerialized (demat) accounts per month, the potential for growth in this sector is substantial.

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Agrawal said every market faces challenges, especially the ones which are unknown. Investors don't have control over global challenges like the current Israel-Hamas dispute.

"But what we have control over is earnings growth. We look at corporate earnings 90 percent of the time while global factors are just 10 percent. So, my focus is always on what is the profit that a company is generating, and what is its expectation," Agrawal added.

The challenge

The real challenge, however, is to find such a company at a reasonable price. "India is an extremely well explored market. What concerns me is buying a stock at a reasonable valuation," he said.

Despite rising yields, Agrawal indicated that the gains were more evident in the US markets, and Indian debt markets might not offer attractive returns. Agrawal's optimistic outlook highlights the potential for significant growth in the Indian markets, driven by corporate earnings, savings, and the expanding demat account landscape.

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