Share Market News / Are the good days of the market coming? Sensex may rise by 65%

Share Market News: The volatility in the stock market and gold prices has always been a topic of discussion for investors. In recent days, the stock market saw a second consecutive rally, while gold prices hit a new record high of Rs 88,400 per 10 grams. This situation has left investors confused about where to invest next.

Current state of the stock market

The stock market has gone through a lot of volatility in the last few months. It had fallen more than 10% from its September peak, and recorded a decline for five consecutive months from October to February. However, the recent rally has made investors hopeful once again.

Importance of Equity-Gold Ratio

The equity-gold ratio is an important indicator for investors to understand which asset may perform better over the next few years. According to a report by Edelweiss Asset Management, when this ratio is less than 1, the stock market may give better returns over the next three years. Currently, this ratio is 0.86, which is less than the long-term average of 0.96. This means that the stock market may give more profits than gold in the next few years.

Possible rise in the stock market

If the ratio between Sensex and gold remains between 1.2 to 1.4, then the Sensex gives an average return of 7.78% and gold shows an increase of 19%. But if this ratio falls below 0.8, then the Sensex can give a return of 15% to 65%, while gold can fall to 7% or even below.

Historical performance

If we look at the data of the last 15 years, then gold has given an average annual return of 11.5%, while the Sensex has given 10.3%. However, in the last 5 years, both have given almost equal returns of 14%. This shows that gold may be a safe option for long-term investment, but investing in the stock market may prove to be more profitable in the current circumstances.

Advice for investors

Have a long-term perspective: Investing in the stock market can be beneficial for the long term, especially when the equity-gold ratio is favorable.

Build a diversified portfolio: Make a balanced investment in both gold and stocks instead of relying on only one asset class.

Keep an eye on market trends: Understand the bullish and bearish trends in the market and make an investment strategy accordingly.

Conclusion

Given the current equity-gold ratio and market conditions, the stock market may give better returns than gold in the next three years. However, investors should take a decision keeping in mind their investment goals, risk tolerance and financial situation.