Indian indices are trading at all-time highs and could further scale new heights. Experts, however, advise caution and expect to see consolidation in the future. Domestic brokerage major ICICI Direct sees a 15-20 percent discount in the equity markets factoring in future earnings volatility and unforeseen macro risks. It sees the Nifty at 16,300 in FY23.

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"We use bottom-up P/E construct to derive ~26.2x as weighted average target PE on Nifty based on our in-house target PE multiples for the index constituents. Consequently, we now value the Nifty at 16300 i.e. 22x P/E on FY23E EPS of Rs 740," analysts at ICICI Direct noted in a research report.

The brokerage said it will revise its earnings for FY22 after the management commentary, while also adding, that it believes the impact of the FY23 number may remain limited.

Given the scope of volatility in the near future, ICICI Direct has come out with a large-cap and midcap portfolio for investors. It added that it continues to prefer companies with sound business fundamentals.

The brokerage noted that the large-cap equity model portfolio has continued to deliver an impressive total return (inclusive of dividends) of 249.6 percent since its inception (June 21, 2011) vis-à-vis the index return of 192.6 percent during the same period, an outperformance of 57 percent.

Meanwhile, since June 2020, its large-cap portfolio gave 68.6 percent vs 57.1 percent by the benchmark index.

Similarly, the total returns of its indicative midcap portfolio stand at 380.4 percent since inception versus a benchmark return of 232.4 percent.

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(Edited by : Ajay Vaishnav)