SHARE MARKET – SENSEX SHARE PRICE – 35 YEARS PERFORMANCE

Let us have a quick recap on Share Market Sensex Share price 35 years performance. SENSEX was the first index to be traded in the Indian share market.

As we all know, the share market can yield a better result than any other investments available here is a light spot to show how a long term investor will be benefited much from the speculators.

We shall go through the performance over 35 years of Sensex share price and the market crashes happened in-between 35 years.

 

SENSEX 35 YEARS PERFORMANCE:

 

From the above image, we can understand the 35 years of performance has moved from Rs. 561 to Rs. 37606.

·       Sensex has performed at the rate of 12.87% per annum for 35 years.

·       There have been many ups and downs in the market as we see in the graph. But in the end, the stayed investors are benefited by 72 times return more than the amount invested.

·       The highest value was on February 2020 with 41500, at that time the yearly return will be of 13.5% per year.

·       Only long term investors will be benefited by this risky share market.

Source: BSE WEBSITE 

Here, we are not going to discuss the speculators in detail. We shall differentiate the long term investors into two types.

1.    Stayed Investor.

2.    Intelligent Investor.

We shall examine this in detail after having a look at the big share market crashes in India.

 

BIGGEST CRASHES IN SENSEX SHARE PRICE:

          In other terms, it can be defined as the biggest market crash. There were many crashes that happened in the past, in which the COVID-19 crash has created more bloodstreams in the market.

1.    Harshad Metha Scam (22^nd Apr 1992 – 7^th May 1993): Market declined from 4467 points to 2219. This made a negative growth of 50%.

2.    2008 Great US Financial Crisis (4^th Jan 2008 – 12^th Dec 2008): Market declined from 20686 points to 9690, which made a huge 53% degrown in the market.

3.    COVID-19 Pandemic (24^thJan 2020 – 23^rd Mar 2020): Market declined from 41630 points to 25981. This counts for a great shortfall of 38% in just two month’s time.

All the major bloodstream of the market took for a minimum of 1 year and then the recovery happened. Only COVID-19 pandemic hit for 2 month’s time.

Except for the COVID-19 crisis, the other two big crises had only U-Shape recover. Not a V- shape recovery.

This gives us a clear picture that, still COVID-19 crisis has not ended. The real treat is still behind.

The global markets are in positive movement only because of

1.    The Government have printed money and making the demand to be in the market.

2.    Rights issue of many companies make cash flow and it is seen in financial reports.

3.    Share pledges.

4.    Many traders have opened the DEMAT account to earn in the time of lockdown. In India, almost 6 lakhs of new DEMAT accounts have been opened in the last 3 months.

BENEFITS FOR LONG TERM INVESTORS:

          Sensex share price over 35 year’s performance might have given us a better idea on how a long term investor can be benefited from this market cycle.

          There are two types of investors, they are Stayed Investor and Intelligent Investor. Let us discuss these types;

          Always keep in mind, an investor should be aware of the price to earnings per share (P/E ratio) on his investing.

 

STAYED INVESTORS:

·       The investor who systematically invest some amount every month without any analysis of market condition or P/E ratio.

·       They think they will be benefited on both, market growth and market fall when they keep on investing.

·       For those stayed investors, the return will not be 12.87% per year. The maximum they would have got is 10% interest per annum.

 

INTELLIGENT INVESTORS:

·       Intelligent investors are those who don’t invest all the time in the Market. They wait for an opportunity in the market.

·       The market always provide us the opportunity to buy in share market in intrinsic value.

·       Apart from the above mentioned Share market crash, the market has given many opportunities in the last 5 years.

§  Demonetization – 6% down.

§  2018 China-US Trade war – 6.7% fall

§  2019 Union Budget – 4% fall

·       Intelligent Investors always follow only one formula. When everyone is busy in the market they just watch deeply and when everyone watches the market, they will be busy.

·       They always see market P/E value of the market and move towards the market for investing.

·       Before all the big crashes, the P/E of Sensex Share price was above 23 times the earnings. After the correction P/E came down to 15-16.

·       Intelligent Investors always stop investing when P/E reached 20 and start investing when it comes down to 18 or lesser.

·       In higher side, they know to rebalance the capital gain and park in debt funds when the market is on the higher side. Then invest all the amount from debt fund to equity when the market corrects.

 

CONCLUSION:

·       The Sensex Share price has cleared our minds. Only long term investors will be gained by the share market.

·       Be an intelligent investor, know the market and gain as much as the market provides.

·       Invest by the intrinsic value and analyzing the P/E ratio.

·       As an intelligent investor, learn the best technique of rebalancing. When our fellow investors are in degrowth. We can be gaining through fixed income instruments.

 

For more details on the last three performance of the Nifty market, Please check here.