If earnings remain robust over next 3-4 years, Sensex at 1,00,000 would just be a formality, says this fund manager

Anticipating robust gross domestic product (GDP) growth of 7.5 percent to 8 percent for the next two years, Dadheech emphasises the importance of corporate earnings in wealth creation

The Indian equity market is at a lifetime high, with the Nifty 50 breaching the 21,000 mark and the Sensex scaling 70,000 points. A confluence of factors, including the Bharatiya Janata Party's (BJP) electoral success in the assembly polls, foreign institutional investors (FIIs) turning buyers, positive growth figures, and expectations of a US Federal Reserve rate cut, contributed to this remarkable upswing.

Aishvarya Dadheech, founder and Chief Investment Officer (CIO) at Fident Asset Management, remains optimistic about the bullish momentum. While Fident is awaiting its PMS license, Dadheech has been in the investment industry for over 17 years. He managed the Ambit PMS for six years in his last job.

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Anticipating robust gross domestic product (GDP) growth of 7.5 percent to 8 percent for the next two years, he emphasises the importance of corporate earnings in wealth creation. Dadheech advises investors to focus on high-quality businesses rather than market indices. He believes a 12-14 percent compounding of the stock market is achievable over the next three years. "If earnings remain robust over the next three to four years, 1,00,000 on the Sensex would just be a formality," he says.

Regarding real estate, Dadheech acknowledges the recent rally but highlights the challenges posed by rising interest rates. Anticipating a softening of interest rates and potential liquidity easing measures, he sees continued growth in the sector.

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Dadheech advises cautious investment due to risk-reward challenges in recent rallies. For those averse to risk, playing through real estate proxies such as tiles, plywood, or paint players could be an option for better-managed, stable alternatives.

However, the outlook for sugar stocks appears less favourable due to government-imposed curbs on ethanol production. Dadheech recommends caution in sectors vulnerable to government interventions, citing historical sentiments affecting stock prices. While advocating caution, he suggests that investors may find some buying opportunities amid regulatory uncertainties.