Bombay Stock Exchange is the oldest stock exchange in Asia and it is considered as the theoretical mercury of Indian economy/market on which majority of traders/investors designs their trading strategies or in other words, the pedestal of their investment decisions.
History highlights
The BSE (Bombay Stock Exchange) was established as `The Native Share & Stock Brokers Association' in 1875. Its all started when some 22 stockbrokers commenced trading under a tree opposite the Mumbai Town Hall in mid 1850s with an investment of just Re. 1 each, a substantial amount at that time. Premchand Roychand was the top broker of that time who assisted in creation of procedures for the trading system. Several stock broking firms in Mumbai were family run enterprises at the time such as Jamnadas Morarjee, D.S. Prabhudas & Company, Champaklal Devidas, and Brijmohan Laxminarayan. etc.. Few of them still managing their broking businesses. The Government of India recognized the Bombay Stock Exchange as the first stock exchange in the country under the Securities Contracts Regulation Act -1956.
The BSE Sensex was initially composed in April 1979 with some 30 stocks in various sectors. The BSE trading platform enhanced by adopting the computer based electronic-trading system in 1995 and currently it has more than 5000 active listed entities and its the largest in case of number of participants in a single stock exchange. India’s economy is comprehensively reflected on the rise of the Sensex and it is one of the dominant markets in Asia. In 1990, Sensex has crossed the 1000 point mark, was an Indian detonation aligned with the global markets reformation. Year 1990 was a historical year for the BSE Sensex.
Thrilling twenty years
On July 25 1990, the Sensex touched the exciting four-digit figure for the first time and closed at 1,001. It was one of the milestones for Indian equity market as well economy which never looked back from that point. Since, the upward trend of BSE Sensex is one of the steadiest compared to other overseas markets/indices and it will be interesting to observe the wonderful story of Sensex. I have placed few statistics on BSE Sensex since the year 1990 and the probable arithmetical conclusions left on you.
Sensex has shown an average yearly hike of 588 points in five years since 1991 (1991-1995).
Sensex has shown an average yearly hike of 441 points in five years since 1996 (1996-2000).
Sensex has shown an average yearly hike of 658 points in five years since 2001 (2001-2005).
Sensex has shown an average yearly hike of 2333 points in five years since 2006 (2006-2010).
2011 - 2015?
Sensex has shown an average yearly hike of 515 points in ten years since 1991 (1991-2000).
Sensex has shown an average yearly hike of 1496 points in ten years since 2001 (2001-2010).
2011 - 2020?
Sensex has made an average yearly hike of 1000 points in last 20 years since 1991 (1991-2010)
Sensex was never made a negative YoY difference on year high after 2002 except in 2009 which were totally based on the recession, truly an external factor.
Sensex took almost 16 flat years to touch the first 10000 levels (25 Jul 1990 to 07 Feb 2006, check the table). Interestingly it has grabbed the next 10000 points with in just 1 year and 8 months (07 Feb 2006 to 29 Oct 2007). The villain is same recession.
More precisely, reaching the first 5000 points since 1990, took some 9 years, next 5000 mark crossed in 7 years and the next both 5000s are in just 1 year intervals. Is that amazing? I strongly believe the recession played the foul, otherwise?
If we take last 20 years of history as a base, simply the Sensex have to reach some 30000 level by end of this decade. But remember, the ongoing trend as well other sustaining growth factors are much supportive than initial 10-15 years. Watch the figures of recent years.
What you think? How many more years to take for the 30000 levels considering the trends? Another 10, 4, 2, 1 or less?.
I have placed a couple of screenshots above in which you can read much more than what I have typed here. Anyway, raising questions and finding answers in contrast with the history is left on you. But I am sure India will stamp its authority in the global economic scenario by this decade. India being diverse in many sectors will see more upside due to the strong demand from its correlated sectors and it’s the most appealing destination for the investors worldwide.
A New Year gift post in the multibagger series is pending and I am working on that, will publish very soon.
A great quote is worthy here to mention; "If past history was all there was to the game, the richest people would be librarians - Warren Buffett
Comment please......
Happy investing & Regards
Shabu Thachat – sthachat@gmail.com
Nice points.
ReplyDeleteSomehow I think, this should not be looked as 1000 point basis, rather should be looked as percentage basis. I will rate 1000-->1200 much higher then 10000-->11000 (double to be precise).
30000? I am not expert. Just going by 15% return YoY, it should take 3 years. But, I don't mind 15% YoY for very long term basis, even though 30000 is not reached in 3 years or 7 years.
And of course, I am looking for stocks which can generate substantial returns. So even though sensex declines, there is every possibility, I may be making good money. However, for my MF portfolio and betterment of society, Sensex should generate good returns.
Very good Post. Looking at the facts, I believe there is no reason to be pessimistic about Indian Markets even in this downfall. If history is the basis, then SENSEX will be at 23000 at least by this yr end.
ReplyDeleteKumaran.
Shabu..its been a longtime u wrote something
ReplyDeletepls keep writing and encourage investors community
Thanks