Pankaj Tibrewal, Senior Executive Vice President and Fund Manager of Equity at Kotak Mahindra AMC thinks that mid-teens earnings growth expectations from the Nifty 50 is a realistic target.
Large-cap stocks, according to him, are now more reasonably valued than midcaps. The worsening midcap market breadth is the first indication of profit booking, as valuations appeared to be frothy.
In Tibrewal's view, investors should not ignore quality when making investment decisions, especially in times of economic uncertainty.
“Quality anchoring at this stage is extremely important. Broken balance sheets and broken businesses should be avoided, leverage should be avoided at any cost. Also, stock selection should be very selective where there is
earnings visibility and predictability,” he said.
He also flagged the rising cost of capital over the last two years, which could present challenges for risk asset classes like equities.
For the next three to six months, he will scout for opportunities in the
IT sector. “FY25 is the year one should be playing for IT and if valuations become reasonable, we would look to reduce our underweight position," he said.
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(Edited by : Shweta Mungre)