Sensex to surpass 1,00,000 mark in 2-3 years, says Master Capital

Indian equity benchmarks are on a record-breaking rally and the S&P BSE Sensex crossed another milestone on Wednesday by surpassing 80,000-mark for first time. Market participants expect the benchmarks to scale new peaks going ahead. In the backdrop of these events Republic Business spoke to Arvinder Singh Nanda, senior vice president of Master Capital Services on outlook for Sensex. Edited excerpts:

What is driving the markets higher and how long will it take Sensex to cross the milestone of 1 lakh?

Long-term investors are optimistic about India's market despite potential corrections, expecting the Sensex to surpass 1,00,000 in 2-3 years barring global economic crises. India's rapid economic growth and political stability support a strong bull market outlook. For investment strategy, we emphasise prioritising quality stocks and maintaining a long-term perspective for sustained returns.

Mid- and small-cap shares are also commanding expensive valuations. Should investors wait for a meaningful correction to enter this space?

Investors should be cautious while picking stocks in mid- and small-cap space as most of them are overvalued and pricing in multiyear earnings growth driven by strong economic outlook, hence fresh entry should only be done on stocks and sectors where valuations are reasonable and there is clear visibility on growth.

IT sector will kickstart the Q1 earnings season for Nifty 50 companies going ahead. What do you expect from large-cap IT companies?

The earnings for the large cap IT companies are expected to remain subdued in the short term as there is still not much clarity regarding the timeline for rate cuts and the recent guidance from Accenture also does not indicate a recovery in demand as of now, although there is buzz around deals wins in the AI segment, any meaningful impact on earnings is yet to be seen.  

Given the sharp jump in the markets which sectors according to you are overvalued and where do you see pockets undervaluation?

Assessing market sectors involves balancing valuations with growth prospects. It's essential to conduct thorough research tailored to individual goals and risk tolerances. What appears overvalued to some may be justified by strong fundamentals or anticipated growth. Conversely, undervaluation might hide in overlooked sectors or those undergoing transformative changes. A nuanced approach acknowledges diverse investor perspectives and aims for long-term alignment with financial objectives. Ultimately, prudent investing demands careful analysis of both qualitative and quantitative factors amid market fluctuations.