With Nifty 50 close to 21000 & BSE Sensex nearing 70,000 mark, we are at all-time high levels in equity markets. On one side there is euphoria while on the other there is some pessimism due to a fear of market crash or corrections as many start equating all-time-highs with bubble peaks.
As Scientific Investors we should focus on valuations and not on headline numbers. Nifty 50 P/E is at 22.3 and the RoE is 16.4% which indicate that the current valuations are far from being in any sort of bubble territory and one can continue to allocate capital at current levels.
While markets can always fall, waiting for a correction is not a prudent strategy, especially, not in the current strong economic conditions.
The Indian economy registered a robust growth at 7.7% in the first half of FY24. The average monthly GST collection this year till Oct is 11% higher year on year. Credit growth remains strong with a growth rate of more than 15%. The gross fixed capital formation expenditure has also seen a strong growth of 11% yoy in Q2FY24. Auto Sales in Nov grew at 18%. The manufacturing PMI index, where a reading above 50 indicates expansion, has remained in the range of 55.3 to 58.7 in the last one year. All the above are indicating strong capex investments and strong consumer demand building a strong case for sustained economic growth.
Moving beyond all-time-high jitters, one should be looking to identify multiple growth vectors to build a diversified portfolio consisting of core and satellite allocations. Growth vectors are exposed to long-term growth potential and are yet to be fully identified by the market. At the stock level this essentially means identifying high quality companies with low valuations. This is typically difficult to spot as generally the high quality companies trade at high valuations and companies trading at low multiples are typically bad businesses. This needs a scientific approach and a sophisticated analytical tool kit.
Some of the current growth vectors that we have identified include Banking and financial services, Digital Transformation, Power, Renewables and Green Hydrogen, Railway Infrastructure and Defence.
Stay tuned to know more about these growth vectors.
AMA session with Dr. Vikas Gupta & Ashwini Shami
Join us for an insightful discussion on 9 Dec, 11.30 AM with renowned financial experts, Dr. Vikas V Gupta and Ashwini Shami, as they share their strategic insights on how to navigate and allocate your investments wisely in these record-breaking market conditions.
The financial landscape is ever-changing, and staying ahead requires knowledge and a strategic approach. Dr. Vikas Gupta and Ashwini Shami break down complex concepts into actionable advice, making it accessible for everyone.
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