India's Sensex May Treble by 2025, Report Says . Here's What is Driving the Growth
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The world’s fastest growing economy is striking a bullish tone on the economy, reveals the latest wealth report by Karvy Private Wealth, a wealth management arm of Karvy Group.
“We can compare the present situation to the period 2003-2007 with higher expected EPS growth rates for the next seven years and there seems to be a high probability that the Sensex may treble by 2025 backed by PE multiples higher than the recent history,” says the report.
In the last two years, the benchmark index NIFTY 50 has shown a tremendous growth as it rose from 6800 to 10500 level. The respective growth shows a significant growth of the Indian economy despite the shocks of demonetization and Goods and Services Taxes (GST) in the country.
It adds that the researchers foresee the earnings growth to remain strong in 2019. As the General Elections are around the corner and are expected to be held mid-2019, it will share a volatile impact on the domestic market.
But what is accelerating the growth?
Key Growth Drivers
According to a report, individual wealth is expected to touch INR 762 lakh crore by Financial Year 2023. While financial assets are expected to touch INR 518 lakh crore, physical assets will grow to INR 244 lakh crore.
The total wealth held by individuals of India has risen to INR 392.44 lakh crore, and is expected to double its growth by 2023, says 2019 India Wealth Report. The growth was achieved by a huge 17.42 per cent wealth growth in financial assets and a sober 9.24 per cent wealth growth in physical assets. This report notes how the focus of Indians has been changing from investing in gold and real estate to now heading towards direct equity and mutual funds.
It states, direct equity and mutual funds are driving the growth upwards, which is growing at a CAGR of 24.41 per cent and 21.04 per cent, respectively, over the next five years.
“Direct Equity emerged as the hero to capture the top spot where Indian individuals have their wealth overtaking Fix Deposits,” says the report. The report noted that India was the fastest growing economies in 2017, with a 20 per cent growth rate in HNIs population compared to 9.5 per cent globally.
Astute investors realized the power of alternative investments and the wealth held by individuals in alternative investments grew by 33.46 per cent, the report says.
The recent emerging market currency depreciation also saw a renewed interest in the international investments, which saw a jump of 25.83 per cent for FY18, it adds.
Among physical assets, real estate was the best performing asset class, growing at 10.35 per cent over the previous year.
Being the home of the fourth largest population of millionaires in the Asia Pacific region, India was the fastest-growing major market globally in the calendar year 2017, with a 20.4 per cent high net worth individual (HNI) population expansion and 21.6 per cent HNI wealth growth, according to the report.