Kotak's Sanjeev Prasad: Earnings Stabilising, But Valuations Still a Hurdle

• Sanjeev Prasad of Kotak Institutional Equities shifted market view from negative to neutral due to stabilising corporate earnings.
• He expects stronger profit growth for Nifty 50 in FY27 (around 17%), driven by banking and pharmaceuticals recovery.
• High valuations, especially in consumption stocks, remain a major concern, limiting market upside despite improving earnings.
• FII flows are unlikely to turn positive soon due to expensive Indian valuations, better performance in other Asian markets, and lack of AI-linked companies.
• Kotak increased weight in ITC and Max Healthcare, while exiting Lupin and reducing Cipla exposure due to various factors.

Why It Matters: Earnings are stabilising, but high valuations and FII outflows remain significant challenges for the Indian market.