Sensex trades 5% premium based on intrinsic value, says report
Sensex is trading at around 5 percent valuation premium based on intrinsic value. However, mid-cap stocks are commanding a reasonable valuation premium over their historical averages while there is a froth in the small and micro-cap segment, reports Client Associates (CA) Annual Equity Assessment 2024. While large-cap private banks, NBFCs, and IT are looking relatively attractive in terms of valuations, Industrial, PSUs, consumer, and capital goods are expensive as compared to their medium-term averages, the report further adds.
The Indian equity market is in a goldilocks situation with steady GD growth, moderate inflation, favourable policies and strong earnings growth. ALSO READ: Corporates likely to report 15% EPS growth in FY25; Steel sector to outshine, IT boasts high valuations However, investors should moderate their return expectations due to moderately expensive valuations. It is likely to be a volatile year mainly on account of an expected slowdown in global activities and frothy valuations of small & micro-cap stocks.
The report said that the Calendar Year 2023 will be remembered as a year of economic resilience in the aftermath of rising interest rates and restrictive monetary policy. Almost all economists at the beginning of 2023 predicted a mild or severe recession in US. However, strong private consumption due to accumulated covid savings and expansionary fiscal policy enabled the US to deliver better-than-expected GDP growth during the year.
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