Assets still not cheap; Sensex should be 7,500

Assets still not cheap; Sensex should be 7,500

It is also where you come from. In 2002, it was around 3,000. Six years, we have grown at an average in nominal terms of about 15%. 1f one compounds it will be in the range of 120 or 130%. If one takes this calculation, then the index should have gone to 6,000 or 6,500. Instead it reached 21,000. So we can make ourselves very happy or unhappy. All I am saying is assets even now are not very cheap.(Rahul Bhasin, Barings Equity Partners)

In 2002, average profits after tax as a percentage of sales in India was 1.77% of GDP (gross domestic product). Last year it was 6.77% of GDP. So we are off a cyclical high.

If you look at the liquidity situation globally and you look at how global capital is in India the probability of them pulling out is high and therefore I see more downside.

The real GDP has grown 15-16% a year since 2002, maybe slightly more. Maybe the index should be 7,500.

I am happy to see these statements from Rahul Bhasin. I already wrote in my eariest posts that 7500 could be taken as a fair value level. With this expectation announced by Rahul Bhasin, one can hope for index level to touch fair value level.

But still acquiring a portfolio involves tactical action to do various trades and acquire the portfolio. Mya advice is to start acquiring bits and pieces before the big bang buying at a level considered as very close to the lower level.



http://www.livemint.com/2008/10/19234336/Assets-still-not-cheap-Sensex.html?h=E