Nifty fairly valued at 17,000-18,000; near Rs 1,000 EPS likely in FY24......

 Nifty fairly valued at 17,000-18,000; near Rs 1,000 EPS likely in FY24......

 When it comes to equity markets, there is always some reason to worry because there’s always something or other which might move in a direction that might not comfort investors. Today it is the dollar index, tomorrow will be oil, the day after it will be something else. Having said that, from a broader perspective, earnings growth has been pretty good in the quarter gone by and in the next couple of months, we will get into the first normal festival season after two years.

I still firmly believe that a lot of pent up demand exists in the economy and amongst consumers and businesses and as a result, the second half probably should be very strong or resilient in terms of growth. Now when you tie this into the market and given the fact that markets tend to discount 12 months forward earnings, India is a market which probably at Nifty level will do something close to Rs 1000 of EPS in FY24.

So at about 17,000-18,000, there is pretty much a fair valuation for the Nifty index and it is very much in line with where Indian markets have traded on an average for the last 15 years. I think the market has reached a zone where it's very fairly valued give or take 5% on either side. The market could remain range-bound at the index level for some time to come and will have stock specific and sector specific moves.

In the past two months, we have seen the Nifty go up close to 2,500 points but from a valuation perspective, the Nifty PE has moved about 3 points or 3 multiples from roughly about 18-18.5 to 20-21.5. Now the 3 times or 3 multiple movement in the valuation tells me that unlike the Nifty move which was pretty sharp, the valuation uptick not been that sharp partly because Q1 results were factored in and therefore, when we moved our estimates forward, valuations looked a tad bit better.