Our EPS estimates for the Nifty for FY15 is at Rs461.5. The Nifty at 7,264, trades at a PER of 15.7x FY15 earnings. The long term average of the market has been around 14.7x and we are just at a marginal premium to the market and as we see earnings get revised upwards, the valuations will become cheaper. We also believe that with a strong government, we are likely to see the trading range for the market move upwards from the current estimate of 6500‐7500 to between 6800‐7800 levels in the near term and to a level of around 9000 over the next 18‐24 months. Though we expect investors to wait for the budget to see the policies being followed before the next level of investments and if the new government takes the necessary fiscal steps to ensure the fiscal discipline, then we could be in for a prolonged period of strong economic as well as stock market performance. This means that investors need to stay invested in the near term and we are likely to see significant market appreciation over the next few years. However, given the volatility in the market, it is possible that the market will have bouts of ups and downs and we advise investors to buy into every correction in the market as we believe that the resurgent structural story is yet to begin.
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