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Quote On Morning Market 09 February 2023 By Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services

RBI’s projection of GDP growth at 6.4% and CPI inflation at 5.3% for FY 24 is encouraging and good news for equity markets. If these projections materialise India Inc’s earnings for FY24 will not be impacted and Nifty EPS of around 1100 would be achievable. This means Nifty is now trading at below 18 times FY24 earnings, good enough to attract investment. However, the unabated selling by FIIs - selling in 24 trading days and buying in only 3 trading days in the cash market so far in 2024 - will act as a major restraint on any potential breakout rally. For a sustained rally in the market, the FII strategy has to change.  Indications from the Fed that rates are likely to remain “higher for longer” is a negative for equity markets. This view will change if the disinflationary process underway gathers momentum.
Long-term investors can use weakness in the market to slowly accumulate high quality banking, IT, capital goods and cement stocks.

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