Share Market Tips: Market to hit 44,000 by March 2020; valuation comfort seen in small and midcaps

Share Market Tips: Sensex to hit 44,000 by March 2020; valuation comfort seen in small and midcaps

If one goes by historical trends, markets rally before elections, then there is some amount of profit booking and thereafter post-election results, the market stabilises.

While there has been a certain amount of re-rating in the markets in the last month, we expect markets to take a breather before this uptrend continues.

We retain our target for Sensex at 44,000 by March 2020 (12 percent upside), and any kind of sell-off (around 5 percent or more) should be providing an interesting entry point into equities.

Apart from the noise around elections, the market will take cues from the evolving global market developments and upcoming earnings season.

We retain our target for Sensex at 44,000 by March 2020 (12 percent upside), and any kind of sell-off (around 5 percent or more) should be providing an interesting entry point into equities,

After the steep correction seen over the last one year, there is valuation comfort in the small and the mid-cap space. We find value there. As broad-based profit growth was sparse, ‘growth/quality at any price’ had worked very well for the last few years.

Given the run-up in the largecap stocks, they are now trading at the higher band of valuations. To that extent returns expectations from this segment of the market must be rationalized.

Cost-effective ways of investing in the largecaps via ETFs should be considered. We would continue to remain selective in a stock selection where earnings growth is clearly visible.source- www.moneycontrol.com

Most mutual funds seemed to be sitting on cash during the last two months and our sense is that they would be keen to allocate more towards the mid and the smallcap counters.

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