Ambit Capital's Dhiraj Agarwal explains the dilemma of the Indian investor

It is tough to find value at this juncture in the Indian market. At the same time, expecting a runaway move in the Nifty 50 index will be futile as well at the moment, according to Dhiraj Agarwal of Ambit Capital.

In an interaction with CNBC-TV18, Agarwal said that the market has a positive sentiment and that can take the Nifty 50 benchmark to levels of 21,000 - 21,500, but it may struggle to go beyond that.

Elaborating on the positive sentiment, Agarwal said that the investors like Indian stocks, but find it difficult to enter at this moment considering the elevated valuations. "That's a very interesting paradox," Agarwal said. "You like the market but find it very difficult to convince yourself to buy individual stocks in the market."

The recent rebound in Indian equities has meant that the Nifty 50 index has entered the "high optimism zone" within a valuation range of 20-22x. ICICI Securities highlighted earlier that every time the index has traded in this range, its annual returns for the next 12 months have not exceeded 3 percent.

Calling China a "strange case," Agarwal said that everybody wants to go there but everybody is scared of going there. "The few bolder investors have made the move to China," he said, adding that the recent turn of events in Russia and China in the form of regulatory interventions are still fresh in the minds of the investors.

Agarwal also spoke of the consumption space in India, saying that the bottom of the pyramid continues to struggle but the mid-to-upper level is doing well. "It depends on what kind of data you are looking at," he said. Within the discretionary space, Agarwal still called the sector a sell due to high valuations, adding that although Ambit has bought into a couple of names, the firm has a sell rating on most of them.

Ambit recently initiated coverage on Industrial Automation. "While the demand is coming back and the growth rate is going to look significantly better than the last decade, but between 65-85x valuations, it does not justify buying these names," Agarwal said, adding that most of the developments are built in the price.

Businesses catering to premiumisation and formalisation tend to grow faster

Businesses that focus on mass products are still struggling

Financialisation, formalisation and digitalisation are the three themes for India