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Indian equities are trading at attractive valuations despite ongoing market volatility, offering investors an opportunity to invest in quality stocks, Shrikant Chouhan, Head of Equity Research at Kotak Neo, said on Friday.
Speaking exclusively to ANI, Chouhan said the market is trading at reasonable valuations and has already factored in several existing challenges. Currently, we are trading at 16 times FY28 earnings, which is a reasonable level for investors to invest in this market, he said. Chouhan noted that the Nifty has historically attracted buying interest around the 22,000 mark. However, continued selling in mid-cap and small-cap stocks could push the index temporarily towards 21,750-21,800. He said such a decline may not last long, unless crude oil prices rise above USD 120 per barrel. On the rupee, Chouhan said measures taken by the Reserve Bank of India (RBI) and the government have helped limit its depreciation. Policy reforms and inflows from major initial public offerings (IPOs) have supported the currency, bringing it back from the 96-97 range to 94-94.50. He added that foreign institutional investor (FII) outflows have continued but slowed over the past 10-12 days. The RBI is taking appropriate measures to control the rupee and, thereby, can also control the overall outflows, he said. Chouhan also pointed to a possible shift in global investment flows towards emerging markets as technology-heavy indices such as the Nasdaq and Kospi face selling pressure. He said sustained foreign outflows over the past two years have created attractive valuations in several Indian stocks. While the broader market has corrected by around 10-15%, some individual stocks have fallen by 30-35%, creating potential opportunities for investors. On global factors, Chouhan said the decline in US bond yields from 5.30% to 4.95% was a positive sign for financial markets. However, crude oil prices remain a key factor influencing the market outlook. If there is any cooling-off in tensions or positive talks between the US and Iran, we can expect a sharp upward move in the market, he said. He advised investors to accumulate quality stocks at current levels rather than wait for a sudden market rally. Among sectors, Kotak Neo remains positive on mid-sized IT companies, private banks, and hospitality and tourism stocks. However, Chouhan expects the auto sector to remain under pressure due to rising crude oil prices and limited earnings growth. He also flagged concerns over pharmaceutical stocks, which have gained sharply over the past six months and are nearing peak valuations, as well as hospital stocks facing increased regulatory intervention. (ANI)
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