'Nifty overvalued expect correction by 20%, this year'

Brokerage Securities Nifty50 B Kotak believes the index is overvalued by 20 per cent and expects a time correction in the next six to nine months.

-  SUNAINAA CHADHA New Delhi, 2 January

The Nifty index looks to be 20 per cent overvalued as per our model after moving up more than 10 per cent in the last two months," said Anurag Singh of Kotak Securities.

In 2023, the domestic equity market experienced its most impressive performance since 2017, with the Nifty50 and the Sensex rising by 20 per cent and 19 per cent respectively.

The BSE Midcap index soared 46 per cent and the Smallcap index surged 48 per cent in the last one year.

Kotak Securities estimates that the Nifty will reach 21,834 by the end of the calendar year 2024, from the current levels of 21,633. Going forward, the brokerage expects a period of consolidation in the Indian markets this year due to prevailing rich valuations.

"The median pairwise correlations continue to be close to their long-term average.

There was a slight uptick in index volatility in December.

There were net upgrades to the EPS estimates in December, although the total number of estimate changes was low," it said in a note.