Sign in Subscribe
Emerging markets

Market Trends and Valuation Comfort in Indian Stocks

Strategic Insights

— 1 min read

Manish Sonthalia, an expert investment manager from Emkay Investment Managers, recently discussed market trends and valuation comfort in Indian stocks. According to Sonthalia, the market is experiencing a "problem of plenty" with many funds and investors looking for valuation comfort. This has led to increased buying by foreign institutional investors (FIIs) in emerging markets, particularly in India. Sonthalia believes that the gains in the Indian market are likely to stay, despite potential bouts of volatility, and that every decline will be bought into.

Key Takeaways:

  • The Indian market is experiencing a "problem of plenty" with many funds and investors looking for valuation comfort.
  • Foreign institutional investors (FIIs) have been buying Indian stocks, especially in emerging markets, with some very good buying seen in late August and expected to continue in September.
  • Every decline in the market will be bought into, making it a attractive time for investors to invest in Indian stocks.
  • The market has become diversified, with individual stocks and sectors performing differently, rather than everything being overvalued or undervalued.
  • Private sector banks offer an "island of comfort" in terms of valuation, with some banks offering a 10-15% earnings growth and comfortable price-to-earnings multiples.
  • The consumption sector, particularly FMCG names, has been lagging in terms of earnings growth and does not offer much valuation comfort.
  • The power sector is expected to continue its upward trend, with fresh capex announcements and selective names offering decent growth and reasonable valuations.
  • Renewable energy space, particularly wind and solar, is expected to have decent upsides with valuation comfort.

Statistics:

  • FIIs have been buying Indian stocks, especially in emerging markets, with some very good buying seen in late August.
  • Every decline in the market will be bought into, making it a attractive time for investors to invest in Indian stocks.
  • Private sector banks offer a 10-15% earnings growth and comfortable price-to-earnings multiples.
  • The power sector is expected to continue its upward trend, with fresh capex announcements and selective names offering decent growth and reasonable valuations.

Sources:

  • Manish Sonthalia, Emkay Investment Managers (timescontent.com)

Read more