Why Motilal Oswal’s Raamdeo Agrawal sees Sensex at 2,00,000 in 10 years

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Market veteran Raamdeo Agrawal believes that the benchmark BSE Sensex may touch 2,00,000-mark in the next 10 years. This indicates an annualised growth of nearly 15% from the current levels of around 51,400.

Being optimistic about India’s growth story, the chairman of Motilal Oswal Financial Services sees the Indian economy hitting $5 trillion by FY29. However, he believes that the corporate profit growth is likely to be higher than the GDP growth during the next decade.

“A 15% CAGR growth in profits over the next 10 years will take Sensex to 2,00,000,” said Agrawal.

In his note on May 27, he highlighted that the largest democracy, well established federal structure, a huge domestic market that is dominated by youth, rapid digitalisation, robust forex reserves and declining interest rates are some of the favourable factors for the country.

“Stable government in place is an added advantage,” he said, adding Covid pandemic is a temporary blip.

Agrawal said that the Covid pandemic is now a known beat and vaccination marks the beginning of the end. “I expect a K-shaped recovery and larger businesses will recover faster,” he added.

Earlier, the BSE Sensex had witnessed an annualised growth of nearly 11% during the past 10 years. Meanwhile, events like the demonetisation of high-end currency notes, implementation of GST and RERA, crude oil prices and Covid-19 kept the market volatile during the period.

The market watcher further advised investors to focus on value migration and open-up plays. He sees value migration in IT, private banking and private life insurance space.

“Value migration creates massive opportunity for sectors which see value inflow. Private life insurance is a sunrise sector. In this sector, there will be a value migration from public to private,” said Agrawal.

On the other hand, open-up sectors can be classified on the basis of demand – Lost demand and postponed demand. “Post open-up sectors with postponed demand should surge. This includes auto, consumer durables, paints and selective industrials,” said Agrawal.