Gautam Duggad, head of research of Motilal Oswal Institutional Equities shared his views and outlook on markets.

“The market in the last two-three weeks did a lot of chatter about an unstable government. So to that extent, if this exit polls prediction comes true on May 23 then it does remove the prospects of Hung Parliament, third front and unstable government. So that goes out of the window and to that extent, it provides relief in the market,” he said.

“I don’t think there is a significant room left for rerating as far as valuations of the broader indices are concerned unless we see a big change in the earnings trajectory,” Duggad said.

“We have seen the trajectory of earnings is still downwards. We have seen downward revisions which are outweighing the upward revisions for Nifty as well as the broader markets. The midcap clearly offers a chance for a valuation catch up because there has been a huge divergence which has opened up in midcaps versus largecap valuation. Given that sentiments have changed, there could be a good inflow in liquidity and macros. If they remain stable obviously there is a room for valuation expansion in some midcaps. However, you have to be bottoms-up in the midcaps as well,” he said.