Earnings growth key to market momentum: Ashish Gupta
market, there are multiple stocks that are still trading about 50-time earnings," says Ashish Gupta, CIO, Axis Mutual Fund.
No doubt the markets have seen a very good recovery from the lows that it hit in the month of November, but one of the crucial questions now that will be on everyone's mind is that, is India value buy after the recent sell-off?
Ashish Gupta: So, it is great that some of the froth in the market and in the valuations have come off in the month of October. However, I do not think in terms of multiple, the market has really come into a value zone yet. Of course, there are individual stocks that are now much more attractive, but on an aggregate basis, I do not think the market multiples have corrected as much.
So, even though the market corrected about 10%, if you see over the last six months, market earnings estimates are also down by about 4% to 5%. So, the multiples for the market have really not moderated very significantly. If you look at the broader market, there are multiple stocks that are still trading about 50-time earnings. So, we still are not in the value zone, I think that is some time away.
We are still not in the value zone, but what do you think will take us there? In the sense, do you expect the earnings recovery from here on? Do you expect the multiples to then expand? What will then drive the upside for the Indian markets from here on?
Ashish Gupta: It has to be earnings driven. I do not think it can be multiples driven. The first half of this year has been disappointing in
