Starting with the Indian markets Pratik Gupta said that the valuations of the market which is causing this. He further highlights that the Nifty valuation-wise we are at about 22 times current-year earnings, 19.5 times next year’s earnings and this is despite factoring in fairly strong earnings growth.

Kotak is estimating Nifty earnings will grow about 30% this year and 14% next year. They believe that even if you get a little bit of an earnings surprise, a lot of it is already factored in.

From a relative perspective, India is now an outlier versus a lot of the EM markets. India is up about 12% year to date whereas the MSCI emerging market index is only up about 6%. China, Indonesia markets are actually flat.

He believes that privatisation, India’s Global Bond Index inclusion are positive triggers for the markets and on the negative side, the biggest risk we have to watch out for is what happens with the Fed

Talking about the broader markets, Mr Gupta says this time the rally is far more broad-based and it is also reflected in the earnings of these small and midcap companies.

He further adds that a lot of these midcaps have become quite expensive and would actually advise caution on the mid and small cases. He says it would be better to focus on the large caps where the relative value is far more attractive.

Moving on to sectors he believes that financials are our preferred way to play the economic recovery in India. He would look at more of the large-cap private banks rather than the midcap or small-cap ones.

Other than Private banks large NBFCs could do well in his view. As far as PSU banks are concerned, other than the one or two large PSU banks in general, he would still be cautious.

The demand for real estate pretty strong, especially post-pandemic, and combined with the low-interest-rate environment he thinks the affordability is still very good and there will be strong demand for residential real estate in particular. Though commercial side could still face some challenges.