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Outlook on Market By Ms. Nitasha Shankar, Head - PRS Equity Research, Yes Securities

“Outlook on Markets: While there’s been a sharp run up in stocks in recent times, select sectors will see money coming based on their prospects. For example, banking and credit cycle is expected to have bottomed out and this is the sector that faced the brunt of FII selling. Any revival in FII activity will see money move into this space. IT sector as another example is expected to be a be out of favour given that there’s margin pressure and slowdown expected. Apart from that, for small and midcaps, it is largely expected to be a stock picker’s market.

Concerns of Fed moves on indices: While valuations in India are amongst the highest in the world, the change in interest rates and discount rates will not be as severe as what is expected in the developed part of the world. We believe India will have amongst the highest GDP growth rates and this does support the premium. Not to mention that corporate balance sheets remain strong.

Market movement – will Sensex/Nifty touch new highs by Diwali: Cannot be ruled out as interest in the BFSI space (which has the highest weight in the benchmark indices) is gaining traction.  

FIIs impact on the indices: With FII stake considered to be its lowest in many years, we believe the chunk of the pressure on this aspect is behind us.”

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