Market Near Key Support: Kotak Neo Urges Shift to Large-Caps
Shrikant Chouhan of Kotak Neo suggests building long-term portfolios in large-caps as the market nears key support levels.
India's equity market is currently hovering near critical support levels, presenting a strategic window for investors to construct medium- to long-term portfolios, particularly by focusing on large-cap companies. This insight comes from Shrikant Chouhan, the Head of Equity Research at Kotak Neo, who suggests that while the immediate future may be volatile, the broader valuation landscape is becoming increasingly attractive.
The Magic Number: 22,000
According to Chouhan, the market is trading very close to its vital support zones. He specifically identified the 22,000 mark as a major support level for the market. From a valuation standpoint, he noted that the market is currently at 16 times the FY28 earnings, a multiple he describes as "really decent" for those adopting a medium- to long-term investment horizon.
The opportunity within the Nifty 50 is particularly striking. Chouhan revealed that approximately 80 per cent of the stocks within the index are currently trading at least 20 per cent below their fair values, making them prime candidates for portfolio addition.
Geopolitical Shadows and Short-Term Risks
Despite the long-term optimism, the road ahead in the short term is far from clear. Chouhan warned that immediate market direction is heavily dependent on external factors, specifically the geopolitical tension and news flow between the United States and Iran. Because of this uncertainty, he advises investors to prioritize stability.
"My advice is that keep investing in those companies where the vision is very clear and where the company size is big," Chouhan stated, emphasizing the need for strong fundamentals and transparent business strategies.
Sectoral Picks: Where to Look?
With the Q2 earnings season underway, Chouhan observed that several sectors have either met or surpassed expectations. This has opened up specific pockets of opportunity. He expressed a bullish outlook on the following areas:
- BFSI: Including banks and Non-Banking Financial Companies (NBFCs).
- Capital Market Themes: Companies tied to the growth of financial markets.
- Travel and Tourism: A space showing significant potential.
- Pharma: Specifically the Contract Development and Manufacturing Organization (CDMO) space.
- Auto: Selected companies in the automotive sector that have undergone sharp corrections.
The Impact of Mega IPOs
Addressing the buzz around massive initial public offerings, such as the proposed Jio Platforms offering, Chouhan provided a nuanced perspective. While he believes these mega-size IPOs may not drastically alter the market's trajectory in the immediate short term, their long-term value is undeniable.
He explained that such high-profile listings significantly boost India's visibility in global markets, strengthening the country's standing and attracting more international investor attention over time.