After the current rise, the BSE Sensex trades at 23 instances, trailing 12-month EPS and 21 instances FY23E EPS.
Whereas it’s tough to foretell the market, mentioned Rahul Shah, Co-head of analysis at Equitymaster, there’s a 70 per cent likelihood that Sensex and Nifty50 could keep the place they’re or head decrease within the subsequent 3-4 months.
“Valuation-wise, we’re virtually at truthful or barely overvalued ranges and earnings are unlikely to shock on the upside,” he mentioned.
The elevated valuations don’t justify additional run-up out there, mentioned V Ok Vijayakumar, Chief Funding Strategist at .
“Some profit-booking and diversion of cash to mounted earnings could also be thought-about as a short-term technique. Purchase on dips may be thought-about in high-quality financials, main names in capital items and autos,” Vijayakumar mentioned.
Shah of Equitymaster instructed ETMarkets that it has been seen prior to now that investments at a Sensex trailing 12-month PE or 25 instances and above typically lead to not-so-great returns within the subsequent 2-3 years. At PE of 20-21 instances, the returns have principally been fairly respectable, he mentioned.
“Proper now we’re buying and selling at a trailing PE of 23, neither low-cost nor costly. I might counsel that out of Rs 100, maintain Rs 50 in shares and maintain apart the remaining Rs 50 to purchase on dips,” he mentioned.
mentioned it stays constructive on the general markets and believes the current market provides a gorgeous risk-reward play to construct a long-term portfolio of high quality firms, which have lean steadiness sheets, are capital environment friendly in nature, and have progress longevity. It values Nifty50 at 19,425 i.e. 21 instances PE on FY24E EPS of Rs 925.
“The upside from right here on will probably be a operate of stability in world and native macros, and continued earnings supply versus expectations,” the brokerage mentioned.
(Disclaimer: Suggestions, strategies, views, and opinions given by the specialists are their very own. These don’t characterize the views of Financial Occasions)