Indian markets continue to experience volatility due to the selling off of some REITs (Foreign Portfolio Investors). In September, the S&P BSE Sensex and the NSE NIFTY 50 ended the month down 3.5% and 3.7% respectively. They are volatile with a daily movement of 1-1.5% up or down.
According to Kotak Securities, the markets are currently in a consolidation phase and should continue to outperform the rest of EM (emerging markets).
The national brokerage noted that India’s economy continues to do well as recent data shows strong overall consumption – strong GST perceptions, rising home sales, August manufacturing PMI up and improving credit growth.
Overall economic indicators in India continued to show positivity and urban demand showing reasonable strength, similarly rural demand is starting to see green shoots while rising inflationary pressure could hurt demand momentum, said the brokerage house.
Sectors such as automotive, banking, diversified financials and telecommunications are likely to contribute the bulk of net profit growth in the coming quarters, Kotak Securities said, adding that “at 17094, the index Nifty50 is trading at a PE of 20.8x FY23E and 18.1x on FY24E.”
Likewise, discretionary sectors and equities could see some interest from market participants with the upcoming holiday season, the brokerage said in its market outlook strategy.
India’s economic and earnings recovery, coupled with the capital spending cycle, including the PLI program, should keep Indian markets attractive over the long term, the report also notes.
The Indian market is expected to follow global market trends and opportunities arising from the market correction can be used to add quality stocks with an attractive valuation for a long-term investment view, Kotak said, recommending investors to closely monitor global factors and be specific to stocks. .