What Kind Of Returns Share Market In India Can Deliver In Long Run?

4 Apr 2019by Research and Ranking

What Kind Of Returns Share Market In India Can Deliver In Long Run?
After the first gulf war, many NRI’s working in Iraq came back to India due to the political and economic instability. Rajeev was one of them. It was around the same time when Infosys got listed on the stock market in India. On the advice of his brother, Rajeev decided to invest ten thousand rupees in purchasing shares of Infosys. And that is one decision that changed his entire life. His investment of 10 thousand rupees is now worth more than 2 crores on account of the bonus shares received by him. This does not include the numerous dividends received by him. Can you imagine the kind of wealth just one investment in share market in India could create for Rajeev? Share market in India has outperformed all other asset classes such as fixed deposits, real estate and gold in India till date. The benchmark Sensex was at 100 levels in 1979, whereas in March 2019 it has breached the 39000 mark. Over past 10 years between Jan 2009 to Dec 2018, share markets in India have given a CAGR return of 14.22% as compared to 9.41% returns given by gold and 5.80% returns generated by real estate. The benchmark Sensex was at 100 points in 1979, whereas in March 2019 it has breached the 39,000 mark.

So how much return can one expect from the share market in India in the long run?

Keeping the past performance of share market in India in mind, analysts expect its outstanding performance to continue. While it is difficult to predict the exact return, an average return of 15-20% or higher from the stock market in India can be easily expected if one remains invested for a long time in fundamentally sound businesses.

Here are few ways to earn substantial returns by investing in the share market:

  • Understand the businesses you hold
To earn mindboggling returns, you need to dedicate some time to understand the businesses you hold. At the same time, it is strongly recommended to invest in businesses that you can understand and rationale behind buying them.
  • Control your emotions
It is very important to remain invested when market conditions become uncertain as well and not giving in to the temptation of booking small profits when your investment value goes up marginally.
  • Stay disciplined
One of the best ways to smooth out the uncertainties of the share market in India is to invest at regular intervals. Investing in tranches can also help you in cost averaging as well as to smooth out the peaks and troughs. To conclude there are multiple economic, global and political factors affecting share market in India.  There may be another confrontation between the USA and North Korea, or trade war between USA and China or oil prices can shoot up. But remember all these factors are transient in nature. The longer you hold your investments in share markets in India, the lower the risk and higher the rewards.

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