The market corrected recently from its record high but the actual correction is only around 3 percent compared to the rally of more than 22 percent since the beginning of the calendar year 2017.
"The market is still at elevated valuations but fundamentals are not deteriorating. India is in a solid space backed by strong political stability," Sandeep Bhatia, Head of Equity, India at Macquarie Securities Group said in an interview to CNBC-TV18.
Hence, he would recommend buying into dips despite geopolitical tensions. He believes the trend is still up on broader perspective due to strong macro but he is not upgrading earnings forecast.
He wants to wait for earnings recovery and private capex recovery before giving any Nifty target.
GST numbers announced by the Finance Minister Arun Jaitley on Tuesday were above expectations, he said. Bhatia expects GST collections to go up in August and September also.
Finance Minister said the government has received GST collections worth Rs 92,283 crore so far and approximate IGST collections from imports stood at Rs 20,964 crore. Jaitley said he expects Rs 48,000 crore to come in Centre's kitty and states should get Rs 43,000 crore.
Stocks and Sectors
In capital goods, he said he will stick to quality stocks. It is the right time to buy Larsen & Toubro as he expects earnings recovery from next year onwards.
Even L&T has strong topline and orderbook position but the research house closely looks at its cash flow and margin, he said.
GST has been the issue for consumer and consumption space like Marico and Emami as they are dependent on wholesale trade. These companies will take longer time (compared with other sectors) to fall in line with GST.
The next financial year will be good for consumption space as underlying demand will see rebound on a good monsoon and falling interest.
In case of non-banking finance companies, he will be reticent. He is more cautious on the space as valuations rocketed.
But he prefers banking sector as provisions may not be high (like in the past) going forward. ICICI Bank and SBI are preferred bets in the space.
On Infosys, Bhatia will continue with outperform rating as valuations are compelling after recent correction due to Vishal Sikka's sudden exit.
He said there was no lack of trust in Infosys management and company. Everyone is happy with the respected co-founder Nandan Nilekani who returned to the board, he added.
"From now onwards, there will be only business and not management challenge for Infosys," Bhatia said.
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