Harendra Kumar, MD & CEO of Elara Securities, sees scope for positive earnings surprises, particularly as market expectations have moderated materially.
"Commentary has focused on the possibility of weak volumes amid soft margins. However, resilience on the ground suggests there is room for an upside surprise. Our on-ground checks suggest that festive-season volumes may surprise on the upside despite a high base," he said in an interview with Moneycontrol.
Meanwhile, Kumar expects the RBI to continue its rate-hiking cycle, with another 75-basis-point increase over the next six months.
In the broader markets, are you cautious about small-cap stocks? Are mid-cap valuations becoming more attractive?
We prefer mid-caps over small-caps on a relative risk-reward basis. The Nifty Midcap 100 has de-rated from nearly 29x in July to 23x forward earnings, 5 percent below its 10-year average. In contrast, the Smallcap 100 trades at 21.7x, still 22 percent above its historical average, and commands a 29 percent premium to the Nifty against a historical 6 percent discount.