With the market surging to fresh record highs frequently, IL&FS feels it could continue to rise even if valuations are expensive. “It is a blue sky scenario right now with low inflation rates and interest rates, among others. The market tends to go with the momentum in such cases,” Vibhav Kapoor of IL&FS told in an interview.
In such a situation, Kapoor said the financial services firm had increased its cash levels as stocks were becoming expensive. “It is becoming more difficult to buy with conviction, the risk reward ratio is reducing.”
In fact, the base for this market has been escalated and will only move higher, Kapoor said. He also said that it will not be a surprise if the Nifty touched 10,000 in a few months. Meanwhile, given the overall valuation matrix, levels of 9600-9700 could be a resistance for the index, he told.
Pharma stocks have been marginally coming back on buyers’ radar in the previous few sessions. Speaking on their prospects, he believes that the sector will continue to underperform. There may be some value in some stocks, but one cannot tend to look away from the issues such on regulatory front, domestic controls and rupee’s performance, among others. Similarly, he expects information technology (IT) sector to be a negative for another two years.