Nitin Bhasin, Head of Institutional Equities at Ambit, sees limited downside for the Nifty 50, given that valuations have moderated to 20 times trailing 12-month (TTM) earnings.
He remains cautious on small- and mid-cap stocks, where elevated valuations and the potential for growth moderation amid input-cost inflation leave little margin for error.
Once global uncertainties subside, Bhasin believes the defence and manufacturing sectors offer structural opportunities to generate alpha. He also sees a potential mean-reversion opportunity in banking stocks, given their recent underperformance and attractive valuations.
Looking ahead, Bhasin identified potential disruptions to economic activity caused by El Niño as a key risk. With inflation remaining elevated, fiscal support is likely to play a greater role, as the Reserve Bank of India's (RBI) scope for monetary easing remains constrained, he said in an interview with Moneycontrol.
Do you believe the market is nearing an interim bottom, with the next 10 percent move more likely to be on the upside?