Vibhav Kapoor of IL&FS said the valuations have run up, while earnings growth has been tepid. He sees a correction in the next 2-3 months.
There are just a little over 100 points left for the Nifty to clock 10,000 and IL&FS recommends exercising caution once it hits the milestone.
“It will be a happy event (to reach 10,000), but I think it is a level from where you need to be careful. The market has gone up a lot. From this point, valuations are very expensive when the earnings are tepid,” Vibhav Kapoor of IL&FS told CNBC-TV18 in an interview. At the most, there could be a gain of 10-12 percent, but that is the maximum gain, he added.
Explaining the surge, he said the market surged on the back of benign global equity conditions and strong macros on the domestic front. But there are negative cues such as bad loan issue, stretched private sector balance sheets, and lack of earnings growth.
Kapoor said, at this point, the resolution of bad loans are way off.
So, what lies in store for the market now and are there any buying opportunities? “You could see flattish to corrective trend in the market in the next 2-3 months. When that happens, you need cash in the reserve to buy at that time,” he told the channel.
Speaking on any sectors that could be bought in, Kapoor said so far he was negative on IT, telecom and pharma. Now, two sectors are showing signs of bottoming out viz. telecom and pharma. If there is a reasonable correction, then one could probably look at them.Information technology, he said, is a sector that they are relatively negative on. The stocks may not fall from here, but there are uncertainties in terms of US policies, among others.The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .