Very recently, the Sensex crossed 50,000 – a psychologically important number for many. As soon as that happened, investors are now becoming greedy for more. So, thrown out are the discussions about what has happened, i.e. Sensex@50,000 (Sensex@50K) and new targets are liberally being doled out.
The next one is 1 lakh.
Yes. That’s right.
Sensex@100000 – OR – Sensex@1 lakh – OR – Sensex@100K
Even though 50,000 or 1 lakh is just a number for the index, the fact that markets are up 100% from March 2020 lows is remarkable because of the ferocity of the recovery.
And this double your money move of 25K to 50K in a matter of months is what has got everyone excited about the next doubling from 50K to 100K. Everyone wants to know when Sensex will double from 50000 to 100000?
So questions being asked are:
- When will Sensex reach 1 lakh?
- What is Sensex prediction for 1 lakh?
- When will Sensex reach 100000?
- What is Sensex prediction for 100000?
- When will Sensex double?
- What is Sensex prediction 2021?
- What is Sensex prediction 2022?
- What is Sensex prediction 2023?
- What is Sensex prediction 2024?
- What is Sensex prediction 2025?
- What is Sensex prediction 2030?
- What is Sensex prediction 2035?
- What is Sensex prediction 2040?
To be honest, predicting is a futile exercise as they say. But we can try and make intelligent guesses based on historical data and our own subjective and situational awareness.
So let’s explore the possibility of Sensex @1,00,000. But with caution and the acceptance that we can be very very wrong about the timelines. As for the idea about Sensex reaching 1 lakh in future, its bound to happen no doubt. But when will it exactly happen, is what we attempt to guess intelligently here.
Currently, the bellwether index Sensex (as on 08-March-2021) is at 50,441.
When will the Sensex reach @1,00,000?
So in simple terms, to reach from current levels (of about 50K) to 100K, it needs to double.
Now let’s use the Rule of 72 to approximate the time required for Sensex to double and reach 1 lakh for different average return expectations. We have:
- At 6% average annual returns expectation, the Sensex will double in 12 years. That is, we reach Sensex@100000 in 2033.
- At 7% average annual returns expectation, the Sensex will double in 10.3 years. That is, we reach Sensex@100000 in 2031-32.
- At 8% average annual returns expectation, the Sensex will double in 9 years. That is, we reach Sensex@100000 in 2030.
- At 9% average annual returns expectation, the Sensex will double in 8 years. That is, we reach Sensex@100000 in 2029.
- At 10% average annual returns expectation, the Sensex will double in 7.2 years. That is, we reach Sensex@100000 in 2028.
- At 11% average annual returns expectation, the Sensex will double in 6.6 years. That is, we reach Sensex@100000 in 2027-28.
- At 12% average annual returns expectation, the Sensex will double in 6 years. That is, we reach Sensex@100000 in 2027.
- At 13% average annual returns expectation, the Sensex will double in 5.5 years. That is, we reach Sensex@100000 in 2026-27.
- At 14% average annual returns expectation, the Sensex will double in 5.1 years. That is, we reach Sensex@100000 in 2026.
- At 15% average annual returns expectation, the Sensex will double in 4.8 years. That is, we reach Sensex@100000 in 2026.
- At 16% average annual returns expectation, the Sensex will double in 4.5 years. That is, we reach Sensex@100000 in 2025-26.
- At 17% average annual returns expectation, the Sensex will double in 4.2 years. That is, we reach Sensex@100000 in 2025.
- At 18% average annual returns expectation, the Sensex will double in 4 years. That is, we reach Sensex@100000 in 2025.
- At 19% average annual returns expectation, the Sensex will double in 3.8 years. That is, we reach Sensex@100000 in 2024-25.
- At 20% average annual returns expectation, the Sensex will double in 3.6 years. That is, we reach Sensex@100000 in 2024-25.
So many possibilities depending on how much returns the markets generate.
And if you look at the historical annual returns of Sensex, then it has varied a lot:
- Sensex Doubling From 1000 to 2000 – 1.5 years
- Sensex Doubling From 2000 to 4000 – 0.3 years
- Sensex Doubling From 5000 to 10,000 – 6.4 years
- Sensex Doubling From 10,000 to 20,000 – 1.9 years
- Sensex Doubling From 15,000 to 30,000 – 7.7 years
- Sensex Doubling From 20,000 to 40,000 – 11.5 years
- Sensex Doubling From 25,000 to 50,000 – 6.7 years
- Sensex Doubling From 25,000 to 50,000 (2nd Time) – just 10 months (from March 2020 to February 2021)
- Sensex Doubling From 50,000 to 1,00,000 – ??
That was about the actual time taken in years for doubling of Sensex from various index levels.
And just if were to assume hypothetically, that Sensex follows the same pace it did after the recovery from March 2020 lows to double by February 2021. If that pace is replicated, then Sensex might double in less than a year! By maybe 2022-23 itself. That would be crazy. Isn’t it? And then the crash of March 2020 would once again seem like a once-in-a-generation opportunity.
But from all the above possibilities, if we stick to a rational range of 10-12% returns from equity over the long term and not be too adventurous about our expectations, then seemingly Sensex@1 lakh will be here by 2027-28. So that’s a way of saying that Sensex could touch 1 lakh level by 2027-28.
But that is just extrapolation of an assumption. It might be right or it might be way off. Who knows. And if returns are much better than that as many expect given the upticks in various economic and financial parameters of the economy, then Sensex might touch 100000 even sooner. Maybe be 2025 or even 2024.
How to invest in Sensex@100000 prediction?
That’s true. I used the word prediction. Because that’s what it is. We can never be sure. But nevertheless, Sensex 1 lakh will come one day no doubt. It might come a little earlier than what we expect or might come a little later than when we expect it to.
So if any of the timelines we discussed about Sensex doubling from 50K to 100 hold true, then investors can make a ton of money. But that is only when they are invested in equities. You can’t be a conservative investor parking money in debt funds or bank FDs and hoping to benefit from Sensex 1 lakh. Isn’t it?
Sensex at 1,00,000 is a real possibility. So what should be your investment strategy? I would say that there are just a few things to make sure when investing in equities and looking to ride to Sensex@100000:
- Invest because you need to invest based on your financial goals and need to have equity in your investment portfolio. Don’t get carried away by index levels. Don’t invest just because of FOMO or the Fear Of Missing Out.
- Unless you are a professional investor, your best bet is SIP and investing regularly. You may want to time the markets perfectly. And maybe you can. But if you doubt your abilities, then stick to simple regular investments of SIP instead of lumpsum investing.
- Go for proper financial planning and invest in good equity funds linked to your goals. Diversify across assets, mutual fund categories, AMCs, etc.
- Invest in equities only for long term goals and not for short term goals. Investing in equity for short-term goals may work out but it’s full of risk and hence, not suitable for most common investors.
If you are an investor who invests in large-cap stocks (via large-cap funds or index funds), then the index levels hold more meaning for you. You should also look at various index funds in India and decide which amongst the Sensex Vs Nifty you want to pick for passive investing.
So that’s it about Sensex 1 lakh.
I know you and I both want Sensex to reach 100000 as soon as possible. But it will take its own sweet time. So don’t just focus on the destination. Enjoy the journey as well. But the core idea remains the same. If you want to benefit from Sensex@100000, then you need to stay in equities for the long term. I have said this very often and still maintain that equities are likely to remain the best investment option from the long-term perspective.
Predictions about Sensex in 2021, Sensex in 2022, Sensex in 2023, Sensex in 2024 or Sensex in 2025 will be doled out generously by the financial media as they countdown to 100000 for Sensex. But you need to keep a sane head and approach investing in a sensible manner. Only then you will really benefit from Sensex@1lakh whenever that happens.