Here's why Indian stocks are nearing the highest point in a year

Emkay Global MD Krishna Kumar Karwa on Wednesday said that massive tailwinds are observed in the banking sector and investors should stay invested, adding that his firm will look to stay involved in IT stocks as well, as sharp correction is seen there. He was talking to CNBC-TV18 about Indian equity markets, earnings and specific stocks and sectors.

“There is a massive tailwind as far as the banking sector is concerned. So investors should continue to remain invested across sectors and in a very balanced fashion. I would also look at investing in the IT sector where we have seen almost 25 percent kind of cut over the last year.”

While talking about Indian equity markets, Karwa said that despite USD 22 billion worth of selling by FPIs over the last 11-12 months, the indices are back to their peak. In June, it was 15,000-15,500 and from there it recovered. Therefore, it is better that investors focus on bottom-up investing and stay invested from a medium-term perspective.

Meanwhile, talking about Nifty, Gautam Duggad, Head of Research-Institutional Equities at Motilal Oswal Financial Services said, “Nifty is trading at 19.6 times on a price to earnings basis, which is bang in line with its long period averages.”

“The noise, however, on valuations is emanating because on a relative basis we have done very well whereas the global markets have struggled in the trailing 12 months. So when you look at India's valuations in the context of MSCI Emerging Markets, the premium now is a staggering 155 percent, which is at an all-time high, because the rest of the markets have done pretty much nothing.”

Talking about auto space, Swati Kulkarni, Executive VP and Fund Manager at UTI Mutual Fund said, “Our bets are on the personal vehicles, basically the passenger vehicle (PV) side, as well as we are looking at spaces where penetration levels are low like higher CC bikes, for example.”

For more details, watch the accompanying video