Sensex may reclaim 36K in 2018; These 4 stocks can be multibaggers in 2-3 years
We continue to have a moderate outlook for equity during the year given premium valuation, increase in interest cost and reduction in liquidity.

We maintain a target of 36000 on the Sensex subject to the full development of ongoing Q3 and changes in valuation given the global clampdown, Vinod Nair, Head of Research at Geojit Financial Services, said in an interview to Moneycontrol’s Sunil Shankar Matkar.

Q) D-Street bounced back sharply after February month expiry last week. Do you see the pain could return to market or the relief rally is likely to continue?

A) To get stability in the domestic market, the global market has to come out of the phase of volatility. The main factors for the recent and sharp collapse in the global equity market was; premium valuation, rise in global bond yield prevailing to inflationary pressure and worries to US fiscal deficit.

Recently, a relief rally has initiated in the global market led by no hike in US Fed in the February meeting, good earnings results, and stability in bond yield.

Global investors were looking for a bargain gain after the last week’s collapse which was a weakest weekly loss in the last 18 months.

Dow fell by 12 percent on an intraday basis from 26th Jan to 9th Feb. From this low, Dow has recovered by 5-6 percent during which US 10-years bond yield is holding at 2.9 percent, near the 5-years high. This relief rally will be spread to emerging market like India if this trend is maintained in the near-term.

Q) We witnessed a relief rally last week but the way equity markets rallied in the year 2017 a case of valuations does come across after such a move on D-Street. Do you see the correction to continue?

A) We have to understand that the valuation was increasing in the last 2-years without any earnings growth. So similarly, it is also possible that valuation may not increase or reduce even when the earnings growth has started.

Hence it is possible for a further correction in valuation if liquidity reduces from the global or domestic side.

Source: moneycontrol.com