Tuesday, 14 September 2010

Sep 2010, SEN-SEXY

The BSE Sensex (Bombay Stock Exchange Index) hit 19000 yesterday.

Is this a bull run/ irrational exuberance? Foreign investor play??

Here is our take on it.

We looked at the evolution of the sensex since 2003, the time when the Indian economy really took off and in the period 2003-2011 has been growing at about 8% per year. (please use attached link to see how the sensex has evolved)


Given that agriculture grew between 2-3 % in this period, it is safe to assume that the industrial sector grew in excess of 12% on average.

The companies listed on the SENSEX which are BLUE CHIP, therefore had to grow 20% in this period for the sensex to reach 19000 by the end (almost of 2010). Not so unrealistic after all.

We think that if we as Indians held on to our balls and stopped looking for external excuses (FIIs) to explain the rise of the sensex, we should simply congratulate a growing economy and its star companies for the stellar performance of the SENSEX.

We continue to invest in the stock market. India must grow at least 8% for the next 30 years to avoid a social revolution. We are betting on it.

And looking at the sensex reach 40-45000 levels by 2015.

Ritu and Venkat.

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