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Market Statistics to look forward to…

The year 2008 was full of events/shocks ranging from the sudden market fall to the bad news about large institutions in global markets going bankrupt, recession in US and terror attacks shaking up the life of people in India. Through all these events, the markets have been very volatile, BSE Sensex peaking from 21,000 levels to a steep fall to reach 15,000 levels during the financial year end. There on, the markets have been continuously falling on account of a series of bad news to reach 9000 levels in Jan 09 As at January 13 2009, the BSE Sensex had closed at 9071 after sliding from a peak of 20,873 on January 8, 2008. However the strong fundamentals & the long term growth story of India reinstates confidence in the strong trajectory of Indian markets. Assuming that the markets may come back to the earlier highs again & considering the optimistic outlook, let us also estimate the returns generated by the index over different time periods; Now, even if we assume it takes 5 years (Jan 2014) for Sensex to reach its previous high of 20,873 from 9071 level as on 13 Jan 09, the return generated would be 18.14% (CAGR) If it takes 7 years (Jan 2016) for the same, the returns would be 12.64% (CAGR) And even if the Sensex reached 20,873 in Jan 2019 (10 years), the returns would be 8.69% (CAGR) The surprise is that even for a 15 year time frame (January 2024) the Sensex generates a CAGR of 5.71% (CAGR) Consider this in the light of 10 year Government Security yield of 5.68% (as on January 13, 2009) on one hand and NIL long term capital gains tax on Equity Schemes on the other and you would realize the importance of long term investment in Equity Schemes.

Source: www.bseindia.com, CMIE (Centre for Monitoring Indian Economy)
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