ETMarkets Smart Talk: Nifty50 likely to hit 20,000 as we move in 2H 2023: Vikram Kasat

In an interview with ETMarkets, Kasat who has over 13 years of experience said: “The Nifty50 is currently trading at 18.2x one year forward PE which is a 12.1% discount to the 10-year average of 20.7” Edited excerpts:

Indian market has steadily climbed the wall of worries and is trading closer to record highs. Weak global cues triggered some volatility but where is the market headed in 2H2023?
The Nifty50 is currently trading at 18.2x one-year forward PE which is a 12.1% discount to the 10-year average of 20.7.

Considering a base case, we can see NIFTY to be around 20,000 levels given that India has positioned itself in the best spot where it can achieve exponential growth in exports as well as the domestic market.

I firmly believe that we are in a new bull market.

You have been tracking earnings very closely – any standout themes which have come across from the recent numbers?
We like defense and infra and construction themes.

What is the sense you are getting from the management commentary? Are they more upbeat about the next few quarters as commodity prices have cooled off or there are some concerns about a possible slowdown?
Slowdowns are now behind us though short-term turbulence is in everybody’s nature but the reasons like all-time high commodity prices, rising rates, high logistics are settling down which were earlier biggest hurdles for growth.So now everything should be back in line as per expectations in a quarter or two.

In terms of valuations how are Indian markets placed when compared to peers?
India is performing better than other emerging markets. FDI investments into India has steadily risen in recent years, as a response to the escalation of the US-China trade tensions in 2018, many foreign investors and executives have diverted capital allocation from mainland China to India, amongst other emerging market and developing economies and Asian economies.

Big global brands are shifting their facilities out of China. Though for an interim period, FDI turned their way from India due to valuation concerns but long-term capital investments in India is sticky in nature.

Which themes are you tracking or likely to see some traction in 2023 in the run-up to the National elections exactly in the next 12 months?
Defence and Infrastructure

Will ONDC disrupt the new age companies’ model? What are your views?
ONDC is a thriving e-commerce space that is dominated by a couple of players. It is the duopoly of deep-pocketed whether it is Amazon and Flipkart or Zomato and Swiggy, or Ola and Uber.

Now ONDC is meant to democratize digital commerce in India where in 2021 the country had around 289.1 million digital buyers and is expected to increase and reach around 377.6 million in 2025.

How do you pick stocks for your portfolio?
We like themes that have great potential, very niche product lines, new technology, few players, high margins with best-minded management coupled with cheap valuation.

The tide seems to be reversing in favor of India as FIIs are buying Indian equities and DIIs are booking profits. What has changed? Is it the economy or cool-off in valuations?
FIIs were meant to be back, it was just that they needed some valuations comfort and it’s the cycle right where if FIIs are buying then DIIs generally book and vice-versa.

New demat accounts have come down according to NSE data. Can we say that initial euphoria among retail investors is coming down?
Although the total number of demat accounts continues to rise, but incremental new account addition is falling. New accounts in March were 19 lakhs versus 21 lakhs in February.

This is of course because of high volatility in the market, as implied retail investors cannot handle the same resulting in this downtrend, though due to better education on the stock market post covid, we are hopefully seeing additions atleast.

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