Nifty 50 At 20,000: Rally Reflecting Indian Economy's Strength, Says Prashant Khemka

The Nifty 50 reached a key milestone by touching 20,000 for the first time on Monday.

The rally can be attributed to the strength of the Indian economy, Prashant Khemka, founder of White Oak Capital Management, told BQ Prime's Niraj Shah. He observed that the index is at a lower multiple today than it was two years ago.

"The nominal GDP is growing at 10%. Historically, markets have gone higher over long time period. From 275, the Sensex has come to some 67,000 points in 38 years. It's a reasonable assumption that every seven years, it'll double," Khemka said.

Highlighting the power of compounding, he said any target placed on the market would look absurd today. However, "at 10% compounding, Nifty would get to 2 lakh points within the next couple of decades".

"That is just representative of an economy growing at a healthy pace of 6% in real terms," he said.

The Nifty index has jumped nearly 10.44% so far this year and has doubled since the pandemic lows, when it fell to about 10,000 levels. The Nifty 50 took 52 sessions to edge past its last peak.

"In two years, Nifty has gone from 18,500 to 20,000, which is not even a 10% rise. There is no such boom. Nifty is at lower multiple today than it was two years ago," he said.

The recent rally is led by small-cap and micro-cap stocks, while IT, banks and staples haven't participated and their growth remained modest, he said.