Hinting at near doubling of investments made in stocks, Anil Ambani group's renowned fund manager Madhusudan Kela has predicted that the benchmark Sensex will cross 30,000-point level in the next 3-5 years.
Although cautious about the market outlook in the next three months, Kela told PTI that he was highly bullish in the longer term.
Kela will be taking over as the Chief Investment Strategist at Anil Ambani group's financial services arm Reliance Capital from September 21, following his elevation from Head of Equities at Reliance Mutual Fund currently.
"I am bullish about the stock market's performance in the medium to long term and expect the Sensex may even go beyond 30,000 level in the next 3-5 years. FII inflows are also expected to be robust in the long term," Kela said.
A surge in Sensex to over 30,000 level, from near 18,000 points currently, would mean close to 100 per cent rise in the next 3-5 years.
However, he is bearish about the short term and thinks the stock market may be impacted if FIIs start selling amid uncertainty in global markets.
"I expect the stock market may see a correction of around 10 per cent in the next three months if FII inflows, which are fuelling the stocks at present, become subdued. And there is not enough demand from domestic investors to keep the market afloat," Kela added.
Foreign Institutional Investors (FIIs) have poured in as much as Rs 11, 447.60 crore so far in August, according to data available on the Securities and Exchange Board of India (Sebi) website.
With improving global economic conditions, the FII investments have been robust this year with their total inflows close to Rs 60,000 crore so far in 2010.
The BSE benchmark index Sensex had settled at below the 18,000 mark at 17,998.41 down 227 points on Friday last week.
From January to August, the Sensex has been moving mostly in the range of 16,000-17,000 levels, though it had touched its highest level of 18,475 points for the first time since February 2008 on August 19.
Asked if Indian equities at present were overvalued as compared to their peers in BRIC (Brazil, Russia and China and India), Kela said, "foreign investors are still bullish on Indian stocks as they are still under owned by them as compared to Chinese equities."
With his new responsibilities, Kela would play a crucial role in expanding Reliance Capital's businesses, mentoring portfolio managers and providing strategic inputs and guidance on investments across the RCAP group of firms.