I expect three hikes by the Reserve Bank of India (RBI) this year, said Saurabh Mukherjea, Chief Executive Officer, Ambit Capital.

Share Market Live

NSE

“As gross domestic product (GDP) recovers, topline growth will come through, but operating margin will become a big challenge in coming quarters,” he said.

However, slips on operating margins have become a norm for many companies due to cost of money going up, especially in the midcaps and smallcaps, he said, adding that this trend could remain for this fiscal.

According to him, the best of the small and midcap rally is behind us and this is going to be very much a year of largecaps, "High quality companies in BSE 100 should do well as the economy recovers.”

The current fiscal will be the first one in five that one would see double-digit earnings growth for the Nifty or for the Sensex, he said.

Even if one was to factor in a 15-16% earnings growth, 30,000-31,000 on the Sensex is where the fair value lies, and 34,000-35,000 would be too rich, said Mukherjea.

On the oil front, he said the government will hold its nerve till a month prior to the three elections this winter.

“Don’t think the government will cave in just yet on oil and they will likely hold the nerve till October. If oil does not correct by then, we may see excise rates coming off as we go to three elections this winter,” he said.

First Published:May 25, 2018 11:46 AM IST