Indian IT at 2008 Lows, Nifty at 21x: Murarka Says Buy
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- Pankaj Murarka (CIO, Renaissance Investment Managers) pegs Nifty at roughly 21x one-year forward earnings under a worst-case 5-6% earnings growth scenario — almost exactly India's 15-16 year historical average after six years of a bull market.
- Nifty earnings are tracking around Rs 1,050 per share for the current year, placing the index at 22-23x trailing earnings; India's ~45% premium to the MSCI Emerging Markets index sits within the historical 40-60% range, which Murarka says justifies a structural premium.
- South Korea and Taiwan have delivered strong returns over the past 18 months, but Murarka frames those as cyclical — driven by US AI investment tailwinds — while calling India the only secular long-term growth story outside the US in the EM universe.
- Oil at a normalized $80-85/bbl would mean roughly a $40 billion annual impact on India (~1% of GDP), which Murarka believes markets have already priced in, though companies dependent on crude derivatives face margin compression for at least two quarters.
- Murarka expects fiscal stimulus around mid-year on a scale comparable to Covid-era intervention and is buying consumer, auto and financial stocks that he says were hit disproportionately hard in the correction.
- Indian IT stocks are now offering dividend yields of 4-5% and trading at valuations last seen during the 2008 financial crisis after the AI-driven selloff — a setup Murarka flags as his most contrarian call for investors with a multi-year horizon.
Why it matters: The bullish thesis hinges on oil staying below $100/bbl — at $80-85, Murarka says the ~$40 billion India impact is already priced; above that, the valuation case breaks. For long-horizon investors, the correction has converted Indian IT growth stocks into value proxies at 4-5% dividend yields, while domestic cyclical sectors (autos, financials, consumption) carry the added optionality of a mid-year fiscal stimulus Murarka expects to rival the Covid-era response.
