India has been an "out-performer" in the emerging market space, Motilal Oswal's Manish Sonthalia said as he shared his outlook on the market in an interview with CNBC-TV18.
"As long as 20 times or thereabouts prices to earnings multiples on FY23 number holds, I don’t see how markets can fall drastically, even in the global backdrop of rising rates and what has been happening in the US," he added.
Looking at high-frequency indicators, Sonthalia said "all-in-all there are no serious red flags for India" and that it was a "buy on dips market" right now.
Talking about the recent big-ticket investments in the auto sector, he said, "The biggest tailwinds is happening in terms of volumes after a long time. Volumes are now picking up in a big way... Quarter on quarter, there has been a fall in raw material primarily for steel, aluminium, so it's aiding margins as well. After a very long time, quarter-to numbers for automobile companies actually show some robust growth."
He also sees a "pick-up in net profit numbers" for auto original equipment makers.
On the information technology sector which has remained under pressure for several months, Sonthalia said, "As opposed to past cyclical valuation metrics one is used to seeing for the IT space, valuations will settle at a higher level than what you would have seen in the last five years."
In the long-term portfolio, IT is one of the best sectors to hold and Q2FY23 numbers for this sector were expected to be "good", he said.
IT major Tata Consultancy Services (TCS) will set the earnings season in motion when it shares its July-September quarter results later in the day.
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