Kotak Institutional Equities is of the view that the markets are likely to remain range bound this year, as they continue to trade above historical averages and at a significant premium to the MSCI Emerging Markets (EM) index. <\/small><\/p>\n\n\n\n
Pratik Gupta, chief executive officer (CEO) and co-head of institutional equity at Kotak Securities, noted that the Nifty is currently trading at a price-to-earnings (PE) multiple of 19 times based on March 2026 earnings estimates. <\/small><\/p>\n\n\n\n
This valuation appears elevated, considering earnings are expected to compound at 14 per cent in FY26 and FY27, with potential downside risks to these estimates.<\/p>\n\n\n\n
\u201cGiven this, we do not foresee a meaningful upside for the Nifty in the short term,\u201d said Gupta, who shared insights from Kotak\u2019s recent investor conference. <\/small><\/p>\n\n\n\n
However, the downside for the Nifty is cushioned by India\u2019s robust medium-term growth prospects, which are expected to sustain elevated valuations.<\/p>\n\n\n\n
Additionally, a more favourable foreign and domestic liquidity environment in the second half of 2026 could provide further support. <\/small><\/p>\n\n\n\n
Kotak Institutional Equities remains cautious about the outlook for small and midcap stocks, as their valuations have not moderated significantly despite recent market corrections. <\/small><\/p>\n\n\n\n
The brokerage highlighted key downside risks for the broader market, including a sharper-than-expected global slowdown, a deficient monsoon, or a sharp decline in retail inflows into domestic equities \u2014 particularly small and midcap funds. <\/p>\n\n\n\n
On the upside, potential catalysts include a weaker US dollar, which could drive flows into EM funds, and a faster-than-expected private capital expenditure (capex) upcycle. <\/small><\/p>\n\n\n\n
Based on feedback from foreign portfolio investors (FPIs), Gupta said Indian equity markets appear somewhat expensive. <\/small><\/p>\n\n\n\n
Nevertheless, from a three-to-five year perspective, most foreign investors remain optimistic about India\u2019s medium-term growth outlook. <\/small><\/p>\n\n\n\n
FPIs are looking to increase their exposure to Indian stocks once valuations become more attractive. <\/small><\/p>\n\n\n\n
However, many EM funds are currently facing redemptions. <\/small><\/p>\n\n\n\n
\u201cCapital is flowing back to the US, partly due to a strong dollar and Trump\u2019s policies. Even if India is attractive, FPIs currently lack the funds to invest, as money is being redirected to the US,\u201d Gupta said.<\/p>\n\n\n\n
He also pointed out that the capital gains tax has further dampened the appeal of Indian equities for FPIs. <\/small><\/p>\n\n\n\n
\u201cOver the past two years, most FPIs achieved around 20 per cent returns in rupee terms, with the rupee remaining relatively stable. After accounting for a 10 per cent long-term capital gains tax (for holdings over a year), returns were still attractive compared to US bond yields. <\/small><\/p>\n\n\n\n
However, with bond yields rising, return expectations from India declining, the rupee depreciating by 3-4 per cent, and higher capital gains taxes, FPIs are now left with 6.5-7.5 per cent dollar returns after deductions, taxes, surcharges, and fund manager fees. This is relatively low for an emerging market like India,\u201d Gupta added.<\/p>\n\n\n\n
On the domestic front, Gupta noted that while equity inflows into local mutual funds, insurance, and portfolio management services (PMS) have slowed, overall net inflows remain positive. <\/small><\/p>\n\n\n\n
\u201cHowever, the nature of these flows has shifted. Previously, investments were directed towards small and midcap or thematic funds. But now, they are increasingly favouring largecap or balanced debt-equity funds,\u201d he said. <\/small><\/p>\n\n\n\n
In terms of sectoral preferences, Kotak Institutional Equities continues to favour large private banks, non-banking financial companies (NBFCs), life insurance firms, residential real estate, hotels, and the airlines\/hospitality sectors. <\/small><\/p>\n\n\n\n
Conversely, the brokerage remains cautious on consumer staples, discretionary stocks, and the oil & gas and chemicals sectors.<\/p>\n\n\n\n
Eqwires Research Analyst<\/a><\/strong><\/p>\n\n\n\n Top-notch SEBI registered research analyst<\/a><\/strong><\/p>\n\n\n\n Best SEBI registered Intraday tips provider <\/a><\/strong><\/p>\n\n\n\n info@eqwires.com<\/strong><\/a><\/p>\n\n\n\n Telegram <\/a>| Facebook <\/a>| Instagram<\/a><\/strong><\/p>\n\n\n\n Call: +91 9624421555 \/ +91 9624461555<\/em><\/strong><\/p>\n\n\n\n www.eqwires.com<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" Kotak Institutional Equities is of the view that the markets are likely to remain range bound this year, as they continue to trade above historical averages and at a significant premium to the MSCI Emerging Markets (EM) index. Pratik Gupta, chief executive officer (CEO) and co-head of institutional equity at Kotak Securities, noted that the Nifty is currently trading at a price-to-earnings (PE) multiple of 19 times based on March 2026 earnings estimates. This valuation … Continue reading “Markets may remain range bound this year: Kotak Institutional Equities”<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":3728,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[74],"tags":[],"class_list":["post-3727","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-best-sebi-registered-advisory-company"],"_links":{"self":[{"href":"https:\/\/www.eqwires.com\/tutorials\/wp-json\/wp\/v2\/posts\/3727","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.eqwires.com\/tutorials\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.eqwires.com\/tutorials\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.eqwires.com\/tutorials\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.eqwires.com\/tutorials\/wp-json\/wp\/v2\/comments?post=3727"}],"version-history":[{"count":1,"href":"https:\/\/www.eqwires.com\/tutorials\/wp-json\/wp\/v2\/posts\/3727\/revisions"}],"predecessor-version":[{"id":3729,"href":"https:\/\/www.eqwires.com\/tutorials\/wp-json\/wp\/v2\/posts\/3727\/revisions\/3729"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.eqwires.com\/tutorials\/wp-json\/wp\/v2\/media\/3728"}],"wp:attachment":[{"href":"https:\/\/www.eqwires.com\/tutorials\/wp-json\/wp\/v2\/media?parent=3727"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.eqwires.com\/tutorials\/wp-json\/wp\/v2\/categories?post=3727"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.eqwires.com\/tutorials\/wp-json\/wp\/v2\/tags?post=3727"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}