21/05/2016
History has proved again that Sensex can give multibagger returns in 15 years
The S&P BSE Sensex might have moved in a range over the past 12-18 months but creating wealth in the Indian stock market is relatively easy if you have a long-term view.
If history is any indicator, investors will not be disappointed sticking to such a strategy. The S&P BSE Sensex closed calendar 2001 at 3,262 and traded at 25,489 as of Friday's close, which translates into a 681 per cent growth. The best part is, all of it is tax-free.
In a nutshell, if somebody is planning to invest in stocks , she stands to gain, whether the bet is on the index or specific stocks. Being the benchmark, the index offers relatively better liquidity as well as safety over a longer period.
"Over a long period, there is a higher possibility that a steady investor would receive positive payoffs than negative. If history is any indicator, with a 15-year horizon, the possibility of negative returns is almost zero," Nilesh Shah, MD, Kotak MahindraBSE -0.58 % Asset Management said in a column written exclusively for ETMarklets.com
"In other words, a 15-year investor in Sensex would have never lost his capital and may have earned an average return of around 14.5 per cent a year," he said.
Two global investment banks last week said the Indian market is looking attractive at current level and investors can look at increasing their exposure to select stocks on every dip.
Morgan Stanley , which maintains a base target of 26,000 for March 2017, said the benchmark index could well hit a fresh record high in the same period if the government continues the reform process, there are more rate cuts and there is a bounceback in earnings growth, which can trigger a fresh bull run. In a bullish scenario, the global investment bank maintains a target of 32,500 on the S&P BSE Sensex.