India now costliest major market but new highs possible this fiscal: Nischal Maheshwari

Market expert Nischal Maheshwari said India has once again become the costliest major market across the world in terms of valuation. "Yes, it came down a bit and valuations became interesting but once again the rallying has become strong and we are yet again at 24,300-24,400 levels. Now we have to wait and see how the earnings pan out in the second half of the quarter. I think the first half could remain muted and the second half is where we expected earnings would be stronger," he told Business Today on Wednesday.

Despite highlighting the Indian market's expensive valuation, Maheshwari believes domestic benchmarks may hit fresh highs in the ongoing financial year. "Given that the US dollar is already depreciated and the emerging market (EM) currencies are stable or appreciating against the dollar. So, a weakening dollar always drives money back into the emerging market and that's why we are seeing flows coming back to the Indian market. I think these flows will continue, obviously not in a broad way but definitely in stocks where the valuations are comfortable. I would not be surprised if we see a new high in the Indian market during the current financial year," he stated.

The market veteran expects BFSI (Banking, financial services and insurance), IT and domestic consumption-driven sectors to perform well going ahead. "BFSI is one of the sectors that will perform and there's no doubt about that. It's time to start building up positions in the IT sector, given that its valuations are pretty down and growth still continues to remain robust in the US. I prefer domestic consumption as its valuations are a bit attractive to us," he stated.

On the stock-specific front, Maheshwari picked Tech Mahindra and Infosys from the large-cap space. He liked Coforge from the mid-cap segment, citing its outstanding performance quarter after quarter and strong guidance.

The expert advised sticking to the private players in the BFSI space. In the domestic consumption theme, he suggested looking at the automobile counters. "I would start looking at FMCG companies, particularly staple ones. In the last quarter, we have started seeing growth in wages, especially for the unorganised and rural workers, which has started improving. And, staple consumption is highest there as rural and unorganised sector workers almost spend around 30 per cent of their income on food, whereas spending is not more than 15 per cent in the organised sector workers. That's why I believe it is now time to accumulate staple (basic FMCG) but one needs to be very particular about stock selection and valuation," he explained.