Will the recovery in the markets sustain as the FIIs vs DIIs tussle continues

Pratik Gupta of Kotak Institutional Equities shares his insights on market trends.

In the good old days, a change of 1-2% in a week in broad market indices like Nifty and Sensex was considered to be highly volatile, today we are witnessing the days where markets are shaking 3% up and down on consecutive days with 0.5% change in a single day has become a new normal. But of course, there are numerous factors contributing to the volatility, the Foreign Institutional Investors (FIIs) withdrawing from equities has become a concern for many. Pratik Gupta, CEO & Co-head, Kotak Institutional Equities, has expressed his valuable insights on the markets that you need to know!

Talking about the FIIs pulling out the money from India he feared that the trend might continue in the short run as China has become a more favourable destination for foreign investors to park their money. Talking about the multiples, he said that the domestic equities are still trading at a multiple of 20x FY23 earnings which he believes is not cheap enough. Last year, India had outperformed most of the bigger emerging markets (Ems) but also has come up with rich valuations so far.

Check out: How to select the right hybrid fund?

He seemed pretty optimistic regarding the medium to long-term outlook for the domestic markets but in short term he believes the FII selling will continue and put pressure on prices. On the silver lining, he feels banking, capex, consumer discretionary, and engineering exports to be in relatively safer hands. He also seemed bullish on the pharma sector in the short run.

However, there are no doubts regarding the volatility one can expect going ahead. He has advised sticking to companies that have a good earnings story and a healthy balance sheet. The interest rate hikes are another major concern. They have touched their bottoms and are ready to fire up anytime soon. He had exclaimed, “this is the year where men are separated from boys”. The time has come to be a little more prudent before making any investment decision!

Also read: Jagsonpal Pharmaceuticals meets the trend template of Mark Minervini