Nifty at 21x earnings, IT stocks at 2008 valuations: Pankaj Murarka says once-in-a-bull-market buying opportunity post correction
Why it matters: A market veteran sees a rare buying opportunity in India, despite short-term pain.
- Pankaj Murarka identifies value emerging in high-quality companies after a six-year bull market, despite acknowledging near-term pain from supply chain stress and higher oil prices.
- Nifty valuations are currently at 22-23 times trailing earnings, with a worst-case scenario of 21 times one-year forward earnings, aligning with India's 15-16 year historical average.
- India's 45% premium to the MSCI Emerging Markets index is considered justified by Murarka, who views India as the only secular long-term growth story outside the US in the EM universe, contrasting it with cyclical, AI-driven gains in markets like South Korea and Taiwan.
- Oil prices settling around $80-85 per barrel are largely priced into the market, though Murarka expects a two-quarter lag for companies to absorb and pass on higher input costs, impacting first-half earnings.
- Murarka is investing in domestic economy plays like consumption, autos, and financials, expecting a sharp recovery post-stabilization, and also making a contrarian call on IT stocks.
Despite near-term headwinds like single-digit earnings growth and elevated oil prices, Pankaj Murarka of Renaissance Investment Managers sees a "once-in-a-bull-market" buying opportunity, arguing that the Nifty has corrected to its historical valuation average. He believes India's domestic growth engine and justified premium over emerging markets make it a compelling long-term story, with current valuations reflecting much of the oil shock.
