The Indian equity market may see minute corrections but it has been rewarding any trader who has longed it, says Sudarshan Sukhani of s2analytics.
In an interview to CNBC-TV18, Sukhani says investors should use every single dip in the market to buy into the Nifty and Bank Nifty despite the slight underperformance it has seen in recent days.
“We have gotten used to the Bank Nifty outperforming so any small fall is a concern. But it will catch up with the market soon,” he explains.
Below is the verbatim transcript of Vibhav Kapoor’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: Does the bonhomie last or are we holding on just up until the Budget? Yesterday we had this big statement from Deepak Parekh saying that nine months have passed and not much has changed on the ground, are investors showing anything of that impatience?
A: So far no, that is how the market is doing so well. After the Budget one doesn’t know what will happen so we will have to wait for that day and see. However, what is happening is that one is the corporate results as we all know have not been good at all and so there is nothing being reflected in the corporate results so far. So, there is still a lot of hope that FY16 will be good. However, what I am a little more concerned about is the valuations.
Valuations are no longer cheap and there are sectors and stocks which are trading at expensive values. For example, I would not name a company but if you look at the cement sector, all the big guys are trading at 25-35 times FY16 earnings and that is something which for a cement sector which is cyclical in nature is certainly expensive. Then there are FMCG companies trading at 40-60 times.
Generally the market is now trading at about 18 times FY16 partly because the market has gone up but more because the earnings have not come through and there has been a downgrade. So, that is something one needs to be careful about.
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