Can the Sensex really hit 100,000 by 2024?

In a recent interview to Economic Times, Mark Galasiewski of Elliot Wave International has reiterated that he expects the S&P BSE Sensex to hit the 100,000 mark by 2024. From the current 30,750 levels of the Sensex, this mindboggling target is almost 69,250 points, or 225% away.

“In April 2009, I gave The Economic Times a long-term forecast, a 15-year forecast of Sensex 100,000 by 2024 and I see no reason to change that or update that forecast,” Galasiewski said. READ ABOUT IT HERE

This is not the first time that analysts have come out with such stratospheric forecasts. In 2014, Varun Goel, then head of portfolio management services at Karvy predicted the S&P BSE Sensex would hit the 100,000 mark by calendar year 2020 (CY20).

Goel had argued that there had been several instances in the past with 20-25% compounding for long periods in other global markets. The Dow, for instance, witnessed its most spectacular rise in history in 1980s. From a meagre 777 on August 12, 1982, the index grew more than 1,500% to close at 11,722.98 by January 14, 2000.

In his estimate of a 100,000 for Sensex by 2020, he assumed a 20-25% growth in earnings, rerating from 15 times to 16-17 times in the next few years, and expected the real GDP (gross domestic product) to grow 6% and inflation by around 7%, which should lead to a nominal GDP growth of 13%. READ ABOUT IT HERE 

Galasiewski, on the other hand, basis this forecast on the Elliot Wave – a form of technical analysis that traders use to analyse financial market cycles and forecast market trends by identifying extremes in investor psychology, highs and lows in prices, and other collective factors.

“The Sensex and Nifty are both in very long-term uptrends. A chart of the Sensex back in 1979 shows that the uptrend since 1979 has been following a single support line and it is above that support line which shows that the uptrend is very strong,” he says.

Adding: "From Elliott Wave perspective, the advance from 1979 in the Sensex is a super cycle advance and we are now in the sweet spot of that advance." READ MORE HERE 

So, how realistic are these targets?

For the S&P BSE Sensex to reach 100,000 by 2024, it would gave to grow at a compounded annual growth rate (CAGR) of 22% over the next seven years. A peep into history shows that the index has grown at a CAGR of 14% in the last 17 years – i.e. from a closing level of 3,999 on May 25, 2000 to 30,750 levels on May 25, 2017!

“The market base is certainly shifting towards higher ground. Given the fundamental parameters such as flow of funds, valuations and the technical, I expect the Nifty50 index to grow around 10% - 12% every year. If you extrapolate this, over the next seven years, the index should gain around 7,000 points and hit 17,000 levels (around 55,000 – 60,000 for the Sensex) by 2024. Even then, the 100,000 mark is still far away. It will not be easy for the markets to each those levels,” explains Chandan Taparia, deivatives and technical analyst at Motilal Oswal Securities.

That apart, all the components that drive the stock markets higher – economy, flows (domestic and foreign), corporate earnings, government policies, geopolitical situation etc have to be supportive and be firing on all cylinders.

“Though I haven’t looked at the markets from that long a perspective, the immediate target for the Nifty50 is 10,800 and an extended move to about 11,400 levels beyond that (32,000 – 33,000 on the S&P BSE Sensex). The Sensex level of 100,000 seems a far-fetched idea as of now. At best, I expect the index to grow around 10% - 15% every year for the next two – three years,” says Sacchitanand Uttekar, assistant vice president – technical (equity) at Tradebulls.

“The ground realities are changing very fast and all this is yet to get reflected in the markets. We need to wait at least a couple of quarters more to figure out the exact impact of the economic changes on the road ahead for the markets,” he adds.