Markets may shoot up, but exercise caution: Experts

Mumbai, June 2

Stock markets may reach new heights say market experts after exit poll outcomes. Most of the exit polls gave Modi-led NDA government a comfortable win and this has enthused market experts.

The stock market may open with big gain on Monday but Nilesh Shah, MD Kotak Mutual Fund, says Indian stock markets have already factored in the government’s continuity, resulting in a premium valuation compared to peers.

Shah suggests focusing on quality stocks in private banks, consumer staples and the manufacturing sector. “Market has discounted continuity of government. Our premium valuation over peers also discount the continuity of the government. We believe it is time to play for quality stocks at reasonable valuation across private banks, consumer staples and manufacturing sector,” says Nilesh Shah.

Porinju Veliyath, founder of Equity Intelligence, noted that there might be intense buying on Monday, pushing the Index to new highs, but future corrections are also expected. The short covering by foreign investors could push Nifty above the 25,000 mark.

“Smart people could easily predict the election outcome, so equity markets remained strong and richly valued ahead of elections. Of course, there could be some frenzied buying on Monday, and the Index will go to new highs. However, don’t rule out corrections in the future. For long-term investors, Indian equity will continue to be a fantastic asset class backed by a fast-growing economy led by the most progressive government in the history of modern India,” said Porinju Veliyath.

Market experts highlight that the public sector undertakings are now well-managed and their valuations are expected to match those of blue-chip private firms. Infrastructure and real estate sectors can be seen for buying opportunities during corrections.