Vibhav Kapoor, IL&FS is of the belief that despite the weak macros, earnings will support the market over the next 12 months.

According to him, the market could go to all-time highs but one needs to be cautious at 11000 levels on the Niftybecause that is the level when market would again start looking expensive.

Kapoorthinks the Nifty could range between 10000 and 11000 over the next three months and anything beyond that would be an opportunity to book profits.

Even over the 12 months, when 2019 elections come about and if BJP wins Nifty could go to 13000 levels but if they do not have clear win then it may fall to 9000 levels.

“So beyond 11000 on the Nifty the risk-reward ratio is going to be poor,” he said.

Sector wise, he says the private sector banks still look interesting and they seem to be gaining market share quarter after quarter, while PSU banks are losing market share.

The valuations of private sector banks will remain expensive but growth will make up for that, so the retail banks still look attractive in the medium-term.

Talking about housing finance companies, he says the growth for them is still good which shows the economy is improving on all respects.

Moreover, low-cost housing is helping earnings of these companies in spite of the fact that interest rates and bond yields are up. The house remains positive on the space, says Kapoor.

He also like the rural facing auto companies such as two-wheeler makers, as well as road and EPC construction companies.

“As a whole the FMCG sector, particularly the rural oriented stocks look attractive because rural economy is beginning to improve,” says Kapoor. However, it is important to keep a track on valuations.

He says the house has turned positive on IT over the last 6-9 months because some of the transformation into digital etc is happening. Moreover, with expectation of rupee to depreciate further, it would help these companies.

First Published:May 2, 2018 11:08 AM IST