SENSEX FIRST TARGET 33000!!

SENSEX FIRST TARGET 33000!!

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.

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Where should we allocate money?

I recommend you put money in the following 3 scrips:

  1. Undervalued Blue chips
  2. Midcaps
  3. Smallcaps

Note

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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