Shibani Sircar Kurian, EVP & Head of Equity Research at Kotak Mahindra AMC, believes that the pace of earnings upgrades vis-à-vis downgrades will be key for markets.

She said, "If you look at valuations in terms of the estimates for consensus earnings for FY22, it is at about 25-30 percent earnings growth for Nifty companies. So based on that if you look at just on a standalone absolute price to earnings, market is trading at higher than long term average multiples. However, if you look at India relative to the other emerging market pack in terms of valuations, relative valuations are not that expensive."

"In fact we are close to long term average multiples. Also if the pace of earnings upgrades continues from hereon then the market momentum in terms of the valuation support could possibly continue."

Speaking about the cement sector, she said, "Cement is a sector we have been positive on. Cement in terms of volume and demand growth is a beneficiary both from the housing side as well as from the infra play. The key question is whether the pricing trends continue? However, demand and supply is such that we believe that pricing should remain stable and start to move up and therefore add to profitability. So infrastructure, cement, banks these are segments where we are positive on."

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(Edited by : Priyanka Rathi)