Leading Indian stock broking firms Karvy and Kedia Securities feels Sensex will hit 100,000 by 2020 which is a jump of 3-4 times from the current level. This may sound a little farfetched, but let us look at the logic behind this prediction?
Ever since the Modi government took office in 2014, there has been talk of reducing red tapes and faster clearance for projects. Even though this is still a work in progress, there is a definite improvement in the ease of doing business. Now if the center goes ahead with the infrastructure projects as announced in the last budget, it would give a significant push to the economy improve overall business profitability.
It is a known fact that when profitability of companies go up, so does the share prices. Brokerage firms estimate a 20-25% surge in profit for companies year on year, which could fuel a 25% growth per annum in the Sensex value.
The ‘Make in India’ initiative is another initiative that can push up the economy significantly. With optimal resource allocation, India can be a manufacturing hub in sectors like Automobiles & auto components, pharmaceutical, textiles, gems & jewelry, leather goods, IT hardware and solar power. The recent depreciation of rupee will also aid India in this quest.