It’s been a rather tumultuous 2025 for the markets so far. The Nifty and the Sensex are down 5% each for the year and the Nifty’s market cap declined a whopping 15% from its peak. The question that’s on everyone’s mind is what’s the right strategy now? In an exclusive conversation with FinancialExpress.com, Manish Sonthalia, Director and CIO of Emkay Investment Managers says the “euphoria is now gone and the markets are back to where the fundamental values should be.”
5 takeaways from Manish Sonthalia’s perspective on the markets now
Here are the key highlights from the insightful conversation with Manish Sonthalia on markets, FII selling, rupee’s trajectory and the state of the economy.
#Nifty to surge 12% in 1 year
Sonthalia is quite categorical in that Nifty around 22,000 levels is quite stable and he is not bearish at these at all. Charting out targets for the benchmark Index, he pointed out that “Market should gradually move up. We are not going to see a V-shaped recovery. It’s going to be gradual, U-shaped. After 22,000, I think by December or March 2026, we should be closer to 25,000. Long-term, India’s target is 15% compounded, and should probably be around 26,000, -27,500 by the end of 2027.”
ALSO READWhen will FII buying begin? Experts say not before…. #Buy mid and small caps but look at valuations
The big worry point for the markets – small and midcaps. Given the sharp selloff, how should one approach them? Sonthalia recommends going company specific. According to him, the “Only thing is one should be careful about is individual company valuation. If the Nifty is trading at 20x PE and earnings growth is 10%, it is trading at 2 PEG (price/earnings-to-growth). Buy any stock in this market, mid cap, small cap, large cap within that band of 2 PEG. Don’t bet on excessive. Don’t buy stocks that have 3 PEG valuations and above.”
#FII selling not a big worry
Addressing the big elephant in the room- when will FII selling stop, given they have already sold equities worth Rs 3 lakh crore in 5 months. Sonthalia says, “I don’t read too much into their selling. One more statistic to look at will be they have been selling secondary markets but they have been buying primary.” According to him,
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