Sensex will hit 1.5 lakh by 2030 & 3 lakh by 2035! Raamdeo Agrawal makes big prediction

Economic Times

4 days ago

Billionaire value investor Raamdeo Agrawal, in an exclusive interview with ET Markets, has predicted that India's headline equity index Sensex will hit the 1.5 lakh mark by 2030 and 3 lakh by 2035, riding on the back of India's long-term economic momentum and market resilience.
ADVERTISEMENT 'If you look at the last 45 years of history, the market has grown at a CAGR of 15%, which means double every five years,' Agrawal, Chairman and Co-founder of Motilal Oswal Financial Services, said in a free-wheeling chat with ET Markets in his Mumbai office. 'So now it is 80,000, I will say 1.5 lakh in five years. I am keeping 10,000 in my pocket (just to be safe). In 2030, it will be 1.5 lakh and in 2035, it will be 3 lakh.'
His prediction rests on decades of historical data and the power of compounding. 'When I bought my first stock in 1980, Sensex was at 100. And now it is at 80,000. So it is up 800 times at a CAGR of 16%. That's the history.'
Will it be that easy for the Sensex to scale 3 lakh in the next 10 years? Shouldn't the climb get steeper as we go higher?'But the world is also moving up. See the world economy which was, lets say, $25 trillion in 1995, is about $115 trillion now. The world is growing at 5% and even gold will double in 15 years. The economy will grow to $250 trillion in 2040. In that incremental growth, we will get around $10 trillion in the next 25 years,' the veteran investor said, explaining the macro backdrop of why Sensex will remain a compounding machine.
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ADVERTISEMENT Agrawal believes that investors need to think long-term and position themselves accordingly. 'While picking stocks, you will have to look at 2035. You will not be able to recognise the market in 2035. It is going to become so big.'He cites Reliance Industries as a powerful example of what long-term compounding can achieve. 'Reliance was a ₹20,000 crore company in 2003-04. Today, it is a ₹20 lakh crore company. That's compounding which allows you to see the future approximately. That's 99%, but a lot can happen in that remaining 1%.'
ADVERTISEMENT 'Half the time, the future will be better than what you are thinking. Half the time, it will be worse. Your job is to figure out that you end up being on the right side most of the time.'
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Quick Commerce: 'Quick commerce is taking India by storm as everyone wants groceries and all other products home delivered. Who wants to carry a bag to buy stuff?' According to him, the opportunity is worth $1 trillion. 'It might be 20% of the population addressed, but 80% of the value captured. So, if there is a trillion dollar opportunity, then I think $700–800 billion will be addressed.'
Capital Markets Boom: There is a boom in capital markets due to financialisation of savings, he said. Pointing at the market buzz over possible launch of NSE IPO, he said it can be big as it is the mother of all capital market entities.
Energy Transition: Solar and wind companies were once in bankruptcy stage and look at them now!
Manufacturing: The government's focus on promoting manufacturing has also led to investor optimism in the sector. Agrawal said he is seeing a lot more momentum where state governments themselves are coming and inviting the industry to set up factories. 'This is a trend which started from Gujarat and now it is all over the country.'
Still, he cautions, 'These are tailwinded industries. Just because there is a tailwind, you cannot make money. You have to buy it at the right price.'When asked to comment on why the bear markets are getting shorter and every dip is eventually getting bought, Agrawal credited the resilience of Dalal Street to domestic inflows.
ADVERTISEMENT Since 2020, he noted, Indian investors have consistently stepped up buying. 'We are getting whatever $50 to $100 billion flows continuously. So whatever you sell, there is support. It (Inflows) does not allow it (market) to go down too much.'He broke down the ownership structure: 'Promoter block is about 50%, FIIs around 17%, so the remaining 33% is DII, retail plus institutions. FIIs have options—they can go to Korea, China, Russia. So, they are net sellers marginally. These [domestic] guys are continuous buyers.'Agrawal argues that this is a sign of India's maturity. 'As you become a developed country it happens. By 2047, promoters will be as low as 5–10%.'Reflecting on India's transformation from the 1980s to now, Agrawal said, 'At that time our economy was very weak. About 97% of people were below the poverty line and now only 20–30% people are below the poverty line. Today we are self-dependent on food and forex.''Just imagine if you are a poor man and your son has qualified to become a CA. What will he do now? We will beat the world. There is no corporation (globally) where there are no Indians.'Despite all the variables, he holds firm: 'Overall the market will keep growing at that 15%. I still see the index doubling in the next five years.'
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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