Lao Tzu’s famous quote “Those who have knowledge don’t predict and those who predict don’t have knowledge” seems most appropriate in this situation. I was just browsing through the Sensex targets given by various experts before the crash began in early January. Am pasting some of these below… have a good laugh.
“We are overweight on India as it is the best bull market in Asia. Our India weightage is at 38%, which is the biggest in thematic portfolio. The long-term Sensex target remains at 40,000." – Chris Wood, CLSA, Global Strategist, October 2007
“We continue to be bullish on the Indian market and have set a BSE SENSEX Target of 23,950 to 25,000 for 2008” – Citigroup, Jan 08
“This puts the Sensex target at around 27,000 mark. The breakout could be as big as 2.618 times the largest leg, leading to a mind boggling figure of 39,000. Even if we keep aside this over-optimistic view, the target of 27,000 could be achieved and that too most probably in the first half of 2008. The daily chart shows one directional wave (A) followed by wave (B), which seems to be a diametric pattern. This pattern has seven legs and has a bow-tie shape” - Milind Karandikar, Leading Technical Analyst, in Business Standard, 7 Jan 2008
“Being an India bull there are reasons such as strong corporate earnings growth (though slower around 20%), and liquidity expected from FIIs & domestic institutions that could propel the Sensex to 24000 by the end of the year (Sensex PE at this level would be around 22.85 considering Sensex EPS of 1050)” - Amar Pandit, Moneycontrol - 2nd Jan 08
“After Sensex 20,000, the market expectations are for 30,000, but I don’t see the Sensex extending beyond 24,000 this year with the benchmark making a decade high this year” - Mukul Pal (Leading technical Analyst), in Business Standard, 7 Jan, 08
“So, in order to find the Sensex targets for ’08, we added these multiples to the highest monthly closing of the Sensex in ’07, i.e. 20286.99. So, the possible targets of the Sensex in the year ’08 at 0.382, 0.618, 1 and 1.618 Fibonacci ratios are 23094.27, 24828.61, 27635.89 and hold your breath, 32177.51, respectively” – Economic Times, 7 Jan 08
“76.4% of leading brokerage firms viewed that the markets are fairly valued while 11.8% each believes that it is overvalued and undervalued, respectively” - CNBC-TV 18 poll, 1 Jan 08
“The move past 15,400 proved beyond doubt that the long-term uptrend has resumed from the June-2006 trough of 8,800. But this move appears to be the final (fifth) part of the long-term move that commenced in May 2003. This final leg can take a few more months to complete during which the Sensex will move between 17,500 and 24,800. We place the outer target for the Sensex in 2008 at 27,145” – Business Line Research, 30 Dec, 07
“Indian stock market would continue its bull run next year with the benchmark index Sensex likely to touch the 24,000-mark by the end of 2008” - Macquire Bank, 30 Dec 07
12 comments:
Hi Rangarajan,
Interesting quotes but I guess its too early to predict, we r just into third month of 2008.And moreover u may never know ,SENSEX may even breach 23000 level by the end of this year. I totally accept this is a very optimistic view but considering the current market volatility ,anything may happen.
And even if the analyst go wrong it is because of the fact that they failed to predict subprime crisis in time.I guess ur comments r a bit too harsh on them :-)
Moreover as a keen observer of the SENSEX u will agree, the current mood in the market is more because of the global pressures and nothing to do with the fundamentals of Indian Economy.
A realsitic outlook according to me and that after seeing the current slowdown in US Economy would be that the SENSEX "MAY BE" range bound for the whole of this year.
Gr8 work in collecting the quotes...
Hi Anonymous,
Agreed that my comments are a bit harsh. The reason is, it is these same set of people who are now predicting that Sensex will reach new lows each day.
The point is, these guys are as clueless as us. 50% of the time they would be giving us crazy upside targets and 50% of the time they would be giving us crazy downside targets. On an average, they would be just right !!!
I guess there are always some bearsand bulls in the Indian market who decide where the Sensex should be at any given point in time.Bear or bull, they make money.
Other sad part is market literally being dictated by FIIs.
Stock markets r the indicator of a countries economic growth (thou many would disagree with that) and now they r in the hands of FIIs.
How come there is nothing on the recent debacles?? Too busy chilling in Term 8 eh???
Punishing the analyst is easy. We all need somebody to blame, when rosy profits turn into a loss. This blog mentions about Orpheus CAPITALS analyst Mukul Pal view on India Outlook 2008.
"After Sensex 20,000 market expectations are for 30,000, but we don't see Sensex extending beyond 24,000 this year with the benchmark making a decade high this year"
Though the blogger discredits the analyst saying that the forecast was lacking, he does not even carry his complete comments. The respective ANALYST was the only one calling for a BANKING and CAPITAL GOOD slow down and bust extending till 2010.
http://www.or-phe-us.com/orpheus/index.php?tabid=1&categ_id=286
There are no accountability standards for analysts. Atleast these analysts dared to express a view. To have a view and going wrong is one thing. And to shoot from the fence without really understanding the complete research is no short of empty criticism, which does not make this blog any more objective than the subjective analysts it's attempting to bring down.
Hello Anonymous,
I have no intention of discrediting a particular analyst. The point of this post was that as smart investors we should try and develop an independent view of the markets and not be overly led by what others say.
Secondly, i am sure you will understand this is a blog and not an editorial article. So its not possible to put the entire article written by an analyst. And i am sure every analyst will have enough disclaimers in the article they write...
Thirdly, if you think i was shooting from the fence, you might want to refer my earlier posts dated 24th Oct 07 - Defying Gravity and 1 October 2007 - The bubble. My job is not that of an analyst, so i have not published my research in these blogs, but for sure these posts reflect my views that Sensex was clearly over valued at that point. Mind you.. these posts were written in the rosiest of the times.
Lastly, its a good time to reflect on "who is shooting from the fence?"... when you have not even bothered to leave your name in the comment..
Dear Rangarajan,
first: experts as a group go wrong. so you are not reinventing the wheel here.
second: you can not generalise experts as a lose group. criticality does not mean that you just label all experts as wrong. the sentiment indicator of experts never reaches 100% bulls or bears. when experts as a group go wrong, the ratio reaches 75% bulls (during a top) and 25% bulls (during a bottom)
third: the issue i raised was about generalising. if u claim to be an expert urself. pls don't generalise. be objective.
fourth. i did not post any objectionable material here for me to leave my details behind. i just expressed an opinion.
fifth: i felt the blog expressing a generic off the cuff opinion and i said it.
i apologise for any inconvience caused.
Bundle of thanks for this old update! I was in search of it.
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