Markets could recoup last week's losses on Monday, says Prashant Khemka

From a long-term perspective, Khemka is optimistic about continued growth driven by earnings and predicts that if economic growth remains in high single digits and nominal GDP in low double digits, then “earnings can double over the next five years and markets remain where it is in terms of multiples.”

According to Prashanth Khemka, Founder of White Oak Capital Markets, the markets are likely to experience some recovery on Monday, driven by exit polls that align with market expectations and predict a strong position for the BJP. In a conversation with CNBC-TV 18, Khemka stated, "We can expect a recovery of last week's losses and more, with a reasonable forecast of a low to mid-single digit percent increase, anywhere between 2-5 percent."

He anticipates that the market will open on a positive note and continue to rise throughout the day, with small-cap and mid-cap stocks performing particularly well. Khemka also noted that foreign investors might increase their buying activity in Indian markets in the coming years, as many foreign portfolio investors (FPIs) have been waiting for the election results before making new investments.

Looking ahead, Khemka remains optimistic about sustained growth driven by earnings. He predicts that if economic growth stays in the high single digits and nominal GDP grows in the low double digits, "earnings can double over the next five years, even if market multiples remain unchanged."

Regarding sector-specific performance, Khemka recommends maintaining a well-balanced portfolio. He believes that, despite recent underperformance, the financial sector could lead the market over the next 12 to 24 months. Additionally, sectors such as infrastructure and consumer goods are expected to benefit from ongoing government spending and increasing domestic consumption.

Khemka also cautioned about potential downside risks, highlighting that the biggest threat could come from policy missteps. He warned that overregulation and excessive taxation could dampen market enthusiasm.

“What we would not like to see is...getting back into any kind of mode of overregulation either from a policy perspective or from a taxation perspective,” he said.

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