There is not much value in the market beyond some select niche pockets such as financials, said Sanjeev Prasad, managing director and co-head, Kotak Institutional Equities, adding that the market is not cheap by any definition. "Some pockets in the financials like largecap banks, some NBFCS and insurance companies look okay. Some public sector companies also continue to look cheap,” he said.

“If you look at the broad market -- Nifty at 18.5 times on March’20 basis and that is after assuming 24 percent growth in the net profits of the Nifty Fifty index for FY20. So not a cheap market and if you see any earnings misses and downgrades then the market becomes more expensive than where it is currently,” he said in an interview with CNBC-TV18.

The banking sector is expected to report 24 percent earnings growth in the March quarter on the back of the normalisation of profits, he said. However, the macro-economic parameter is not looking good over the last one-two quarters. “Both cyclical, as well as structural problems, are emerging in the economy,” he said, adding that there will be challenges in terms of reviving growth going forward for the next government.

Slowdown in the economy is likely to be more protracted than just one quarter because of structural problems – job creation is not as required, he said. “India needs to move to 8-9 percent GDP growth to meet the challenges of supply side labour dynamics. Longer term data is not looking good, the household saving rates have come down to 17 percent from 23 percent in early part of this decade, which is not good for the economy unless we can boost the investment rate by importing more capital but that makes economy more vulnerable to inflow and outflow of capital, ” he said.

Prasad finds Reliance Industries overvalued and said the fair value of the stock is Rs 1,100. However, he said the market seems to be looking at the stock differently. “At this point of time lot of potential upside related to this company becoming some sort of digital technology platform company over a period of time – e-commerce, e-retail, so on and so forth, lot of that is getting priced-in at this point of time.”

However, if one were to look at the fundamentals of RIL as far as refining margins are concerned they have come down and in calendar 2019 also refining margins would be under pressure on the back of new refining capacity expected to come on stream, said Prasad.

Sharing for the rationale of being disappointed with HDFC Bank numbers, he said the numbers were okay as far as NII growth was concerned but the fee income was on the lower side. Moreover, the loan growth has come more from the corporate side than a traditional retail business, he said.

With regards to the IT sector, he said the space does not offer any real excitement. The company that is delivering good results is trading at high valuations. Infosys valuations look fair but there are issues with regards to company’s margins, while Wipro has given muted guidance for June quarter. The house has a neutral stance on the IT services sector because not sure on bottom-up basis if there is any upside left at current levels, said Prasad.

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