December 15, 2024

Nifty IT Index Price Multiple – Getting close to all-time highs

We remain of the view that domestic Indian IT at large was a value play a few months back and now that value is no longer there. At a < 20% growth the multiples are on the higher side and we are now negative/flat in this space. Would prefer Global Tech if there is a fall in the Nasdaq at some point.

• Friday saw an incredible comeback by the Nifty to close at 24700, possible on account of index management as the expiry took place.

• Nasdaq stay marginally positive just shy of 20k levels as Tesla continued to move high (The stock has gained > 70% since Trump’s victory last month).

• FII numbers have been positive for December so far.

• As expectations of an interest rate cut rise, our immediate outlook on equities becomes a little clouded (unlike popular perception a lowering interest rate scenario is a mirror of a declining economy and history tells us that markets don’t typically do well in times of structural rate declines, however too early to call this and we wish to monitor this scenario carefully) – However, there is reason to be cautious in the short term (Read as 3-9 months)

• US Fed rate decision will be a critical factor in the coming week.

Senior Fund Manager at PPFAS – Parag Parikh Mutual Fund

• French economist says India must do more to tax the super-rich

• GNPA’s of PSU Banks decline further (We strongly believe that the next crisis would be in personal / consumer loans and not corporate loans. A lot of NBFC’s are already down > 50%, though lot of negatives are priced in some of these stocks, some companies could surely go belly up sometime in 2025/2026)

• Gold could have a much more moderate growth in 2025 ( World Gold Council)

• SEBI proposes retails investors participate in algo trading

• What’s driving the rally in IT stocks

• Tesla stock jumps to all-time highs