Market okay for time being, valuations look fairly stretched: Sanjeev Prasad

In a chat with ET Now, Sanjeev Prasad, Senior Executive Director & Co-Head of Kotak Institutional Equities shared his views on the markets.

ET Now: We have come a long way from the recent low. Will the force of liquidity take us higher?

Sanjeev Prasad: It is possible, although I don't want to bet on liquidity as a theme for investment. Next two-three months look okay from India perspective whether it is global or domestic factors. The global factors suggest that tapering is off the agenda for may be three months.

However, some observers say that the Federal Reserve could start the tapering process somewhere around December, but that might happen in the early part of next year. So, there is some amount of relief from the external environment. For the domestic factors, there is some stability as far as the rupee is concerned.

The earning numbers for this quarter seem good, which is a positive tick as far as domestic market is concerned. Inflation continues to be on higher side, but hopefully with good monsoons and good output as far as Kharif crop is concerned that we start taping down at least in the months of October-November.

The elections are coming up in the four states. There is a perception that BJP/NDA will be more positive for the market. There is fair amount of uncertainty brewing on that front. It looks okay for the time being, but the valuations are looking fairly stretched now particularly all the good quality large-cap names.

Most of the good quality large cap names are becoming fairly expensive now and are all trading at pretty high valuations like the consumer names, Tier-1 IT names, automobile stocks, pharma stocks, etc.