ETMarkets Smart Talk: Sensex could go past 80,000 if earnings compound by 12-13% in 2-3 years: Naveen Kulkarni

“The market touching 80,000 is a very probable scenario as corporate earnings are expected to compound by 12-13% over the next 2-3 years,” says Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS.

In an interview with ETMarkets, Kulkarni said: “Quality large caps, which have a higher weight in the index, are likely to perform well as the year passes,” Edited excerpts:

Thanks for being part of the segment. The market is consolidating around record highs despite muted cues. What is your view? Can we see 80,000 on Sensex by December 2024?
Naveen Kulkarni: The market touching 80,000 is a very probable scenario as corporate earnings are expected to compound by 12-13% over the next 2-3 years.

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Global interest rates are likely to trend downwards through the year as growth challenges are emerging in the Western world.

Thus, quality large caps, which have a higher weight in the index, are likely to perform well as the year passes.

This will help key large-cap indices like BSE Sensex or NIFTY 50 to appreciate by 10% during the calendar year.
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The US Fed did signal some concerns about inflation – what is the kind of rate trajectory you foresee for RBI and its impact on markets?
Naveen Kulkarni: The US Fed has signalled a slightly more dovish policy than expected due to concerns about growth. As a result, inflation data could weaken faster than expected in the forthcoming quarters which will prompt the US Fed to cut rates a little ahead of the cycle.

Thus, the global interest rate trajectory is likely to come down but we do not foresee RBI cutting rates any time soon.

However, the liquidity scenario in the Indian economy may improve with government spending and some RBI liquidity measures in the forthcoming quarters.

What is the sense you are getting from Q4 earnings as well as management commentary?
Naveen Kulkarni: The earnings commentary has largely remained positive without any major unfavourable surprises. The BFSI results were in line with expectations, while the IT sector was expected to be slow.
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The rest of the sectors were a mixed bag, but no major negative surprises were observed that would significantly lower the earnings trajectory.

Thus, the commentary from the current earnings season suggests that the FY25/26 earnings estimates will remain unchanged

We are now in May and there is a popular adage ‘Sell in May and go away’. FIIs sold more than 35000 cr in the cash segment of equity markets in April. What is the trend you foresee in May post the US Fed policy stance?
Naveen Kulkarni: There is a mixed trend in the market currently due to a major political event underway and the earnings season maintaining a status quo. The market is currently pricing a stable political regime and sustained earnings growth.

India VIX has continued to rise this month, indicating that the market will likely consolidate around these levels with a fair chance of a minor correction.
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There is a lot of focus on green energy, EVs from the government. Do you see the next wealth creators coming from these new themes?
Naveen Kulkarni: Green energy is a long-term theme for India and the world. Investments in this theme are much needed and it will continue. However, this theme has played out in the near term and there are limited investment options available in the listed space.

How will the IPO story fold out in FY25? We have seen some slowdown in SME IPOs hitting the Street after SEBI comments.
Naveen Kulkarni: It is expected that FY25 will be a regular year for IPOs. Quality companies will continue to attract capital, but those who are not up to the mark will find it challenging.

This year won\’t be similar to the previous year when the IPO market saw some level of excitement.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)

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