Anand Rathi, one of the leading financial services company, expects the bellwether Sensex to hit one lakh mark in four years on the back of strong economic growth and sustained inflows both from foreign and domestic investors.
Anand Rathi, Chairman, Anand Rathi Group, told businessline, “When Sensex touched 5,000, I was the BSE President and we released 5,000 balloons and then 6,000 balloons were released, then people said the market has gone up too much. The problem with our people is we do not think big and investors always ask whether the market can go up further.”
Even in last 10 years, if one takes the high and low point of an index, the market would have moved up 10 per cent. For instance, this year, 52-week high of Nifty was 21,500 and low was 16,800 it is up by 28 per cent and this is the nature of market, he added.
Sensex has delivered a compounded annual growth rate of 14-15 per cent since its inception in 1979 and no other asset class including real estate can boast of such a fete, he said.
“If we take a CAGR of 12 per cent for next five years, Sensex should hit one lakh mark in four years,” told Rathi, a market veteran with over 30 years of experience.
Investors should never time the market for short-term gain and fear about volatility which is related to time.
“When we plot the 10-years moving average of Sensex on a graph it will be like a straight line. However, the movement over one year or one month is plotted it will show huge volatility,” he said.
In fact, Rathi said there is no risk in equity market if the investments are for longer term.
“Usually, when a 60-year old investor says he wants to move out of equity as he does not want to take risk., I tell what is your risk as you are earning money for your son or grandchildren, so put the entire money in equity,” he said.
Individual investors should put their long-term money in equity mutual funds schemes. Any investors trying to time the market may go right twice, if they are lucky, but ultimately they will lose the entire money in speculation, said Rathi.
“No investor can gain knowledge like a fund manager. He meets so many analysts and corporates on a daily basis as part of their job to gain knowledge. Giving 1.25 per cent commission to the fund manager to grow one’s wealth is not at a big expense,” he said.