“As per our ‘Nifty fair value’ model, the index is now close to 20% overvalued. Thus, we do not anticipate a large upside to the index from this point. The most likely outcome for the index in the next 6-9 month period seems to be a time correction,” Kotak said in a note.
Kotak’s December 2023 Concentrated All-Season portfolio consists of Nestle India, Britannia Industries, Tata Consultancy Services (TCS), Bajaj Auto, and NTPC. The portfolio outperformed the Nifty index with annualised returns of 22.9% versus 20.8% returns delivered by the latter. The December returns of its Concentrated All-Season portfolio were also higher at 10% versus 7.9% given by Nifty.
Out of the five stocks in this portfolio, Kotak has an ‘Add’ rating on four stocks and a ‘Sell’ rating on Bajaj Auto. The highest weight is carried by Nestle India (28.5%) followed by Britannia (23.2%), TCS (16.5%), Bajaj Auto (16.5%), and NTPC (15.3%)
December was yet another good month for factors, with only low volatility underperforming the index. Both broad and concentrated All-Season portfolios outperformed the index in December, the Kotak report said. In the 12 portfolios, only Concentrated Low Volatility, and Concentrated Momentum gave lower returns than the Nifty.
Kotak’s other portfolios that gave higher annualised returns than Nifty include Broad All Season (22.8%), Broad Fundamental (23.9%), Broad Low Volatility (21.1%), Broad Momentum (24.6%), Concentrated Sentiment (42.6%), Broad Sentiment (28.7%), Concentrated anti-factor (40%), Broad anti-factor (37.9%).
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)