Sensex may cross 50,000 by 2018, says Morgan Stanley

Morgan Stanley India has said that its target for Sensex crossing 50,000-mark may be achieved earlier than it had projected in 2007. The leading foreign institutional investor (FII), amongst the first few that had shown the dream of making huge money from equities as early as 92-93, said in its latest research report on Indian market that the Sensex may cross 50,000-level in the next nine years that is by 2018. In January 2007 it had projected a 50,000 level for the Sensex by 2020.

The FII has assumed that in the next one and half decade the Indian economy is likely to grow faster than in the last 15 years. It has assumed 7 per cent average industrial growth and 6.9 per cent GDP growth. Corporate earnings are assumed to grow at 15 per cent.

This is likely to deliver a long-term annual return of 13 per cent, the same as the 10-year trailing return. If, instead, earnings compound annually at, say, 19 per cent, the returns could be around 18 per cent compounded annually for the next 10 years.

At this speed of growth Sensex, which is taken as proxy for market, can cross 50,000 level in nine years and in optimistic scenario of higher earnings the target can be achieved in next seven years, said Morgan Stanley.