D-Street valuations elevated; analysts see value in these stocks and sectors

As valuations in the Indian markets look highly stretched and elevated, experts suggest there is no room for a sustained rally in the market. Here are the pockets that still offer value as per experts:

Vaibhav Vidwani Research Analyst at Bonanza Portfolio held that Indian market is amongst the strongest markets in the world right now. The worldwide market has fallen very aggressively whereas Indian has only dropped 4 per cent from the high. Therefore, we can characterize it as correction in the bull market.

Considering today's highest levels on the Nifty, the index is nearly 3 per cent off its record-high level of 25,078.3 marked on August 1, 2023.

The ongoing crisis in Bangladesh acted as an opportunity for textile and garment manufacturers in India, as it may help them increase market share, remarked Vidwani.

The foundation of India's bull market is the country's domestic consumption, which bolsters local narratives. Whether it is private banks, insurance companies, telecom, FMCG and utilities these stories will continue to do well in the short, medium and long term. Also, the expert pointed out of the sector rotation happening post the budget, results, monsoon. Accordingly, money is finding its way into banks, IT, pharma, FMCG, Agriculture and e-commerce companies.

Indian discretionary are extremely expensive, manufacturing, capital goods, infra, real estate are some of the expensive pockets in the market, noted Vidwani.

Meanwhile, G Chokkalingam, Founder of Equinomics, has ‘buy’ recommendations on a host of stocks, including Dr Reddy’s, Coal India, PNB Housing, L&T, Kotak Bank, HDFC Bank and Jio Financial Services.
In the smallcap segment, he likes BalmerLawrie, Nesco, Karnataka Bank, Accelya Solutions, Sterling Tools, and TTK Healthcare.

Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities stated that volatility in global markets has risen sharply over the last few days mainly because of the Bank of Japan's move on raising interest rates, fears of US recession and geopolitical tensions. When valuations are expensive markets tend to worry more about such things.

He added that going forward we believe that volatility is likely to remain high. One should switch out from high beta aggressive stocks and switch to defensives from the Pharma space. Pharma companies have declared fabulous set of quarterly numbers in Q1FY25. We believe that Pharma is an excellent play considering there is earnings momentum and safety too in case volatility rises. Top picks include Lupin and Torrent Pharma, he highlighted.