Next five years will be 'Amrit Kaal' for stock markets: Madhusudan Kela

Even though it is a phenomenal time for investors, he says that his biggest worry is valuation.

The next five years would be 'Amrit kaal' for the Indian share markets, believes Madhusudan Kela. In an interview with CNBC TV18 on December 4, the veteran investor noted that the growth prospects look good as markets have hit a new high and will remain consolidated for some time now.

Kela says that the next five years will truly be led by growth as there is certainty in the country. He was speaking after the BJP's triumph in the three Hindi heartland states of Madhya Pradesh, Chhattisgarh, and Rajasthan.

Even though it is a phenomenal time for investors, he says that his biggest worry is valuation. He says that investors are staying back from entering the markets because valuations have become expensive. However, he believes that stable interest rates, inflation, and certainty in earnings growth, make investments a good bet now. Talking about PSU stocks he says that these stocks are still reasonable.

Kela says that all pockets in the markets look compelling. Talking about opportunities in every sector he says, "This is a buffet, eat whatever you want, just don't overeat." Kela believes that financials offer a good risk reward at this point and that he sees valuation comfort in that sector. "I would say the financial space looks very compelling to me on a risk-reward basis because these stocks have not participated in the last 12-18 months meaningfully," he said.

Kela says that he won't be surprised if Foreign Institutional Investors (FIIs) come back to Indian markets over the next few months. "When this money (FIIs) come to India, it will go into large liquid companies, so banks will be a beneficiary," said the veteran investor.

Kela believes that the market is underestimating the potential of infrastructure companies. Order books, quality of balance sheet, and financial performance in the last two years have been great for infrastructure companies and it will continue for at least the next two years, says Kela. Infrastructure companies are still trading at a low valuation and hence, look compelling, added Kela.

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