Futurecaps received following queries & I would like to share the answers for the same.

Will Sensex reach 40000?

I cannot see such a too-ambitions targets.

How you can conclude that?

Basically, the stock market runs through cycles which are reflection of economy. 

When the economy is really good, the stock prices deviates too-high from the fundamental value.  For example a PE 10 company reaches PE 50, which is over-priced considering the growth & dividend yield factors.

HNI (High Network Individuals), FII (Foreign Institutional Investors), DII (Domestic Institutional Investors) are major players who keep eye on barometers of economy.

Stock Market reflects 6 months before the economy.  It means, if the economy is going to be improved in 6 months, then stock market will reflect that today.

It also means, if economy is going to collide in 6 months, the market will crash today.

The Bull Market will revert 6 months before actual economy bust!

Can India be isolated from a Global crash as Modi is ruling?

I cannot see any such protection shield by Modi.  India is heavily depending on Global in the matter of services & exports. 

Any blockage of money inwards will definitely impact the government taxes, infrastructure growth & thus reflecting in the profitability of all sectors.

Again, Indian markets have a keen tendency to over-look global markets & reflect their boom or crash.

What is your target value for SENSEX?

I would give any initial target of 33000 for SENSEX within next 2 years.  I will be recommending to SELL 50% of your portfolio during the point.

The second target would be around 35000 – 37000 which is not clear from current stand point of view.  I would recommend selling the remaining portfolio in that range.

You can invest in Gold or Debt funds after the sale, to protect from long term capital gain tax.


Where should we allocate money?

I recommend you put money in the following 3 scrips:

  1. Undervalued Blue chips
  2. Midcaps
  3. Smallcaps


Stock Market requires lot of patience & do not over trade.  I recommend keeping 50% of your money in real-estate, 25% in stock market & remaining 25% in easily-liquidatable debt funds.

Author: Futurecaps Chief Analyst

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