ETMarkets Fund Manager Talk: Consolidation in few pockets likely as market valuation looks stretched: Shreyash Devalkar, Axis MF

economictimes.indiatimes.com:

In the last few months, Indian equities have seen a sharp run-up across market segments, particularly the midcap and smallcap stocks, where the bull run is still continuing. In this backdrop, the market valuation looks a bit stretched, according to Shreyash Devalkar, Head — Equity, Axis Mutual Fund.
“Stock selection will hold the key in these markets. For investors, this period of consolidation can be used to rebalance portfolios as we play longer term themes,” he said in an interview with ETMarkets. Edited excerpts:

Inflation and rate hike concerns are making a comeback both on the domestic and global fronts. Is this likely to dampen the Indian market momentum in the near term?
Inflationary risks have been a concern primarily due to increased vegetable prices and the run-up in oil prices.
However, food related price pressures are expected to subside with the arrival of fresh stock, the government banning rice and onion exports and taking measures to bring down tomato prices. So, we believe the current inflation levels are transient.

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In the US, we believe that the Federal Reserve has reached the top of its rate tightening cycle and may increase interest rates perhaps one last time.
We do not expect the Reserve Bank of India to raise interest rates at all and expect a cautious stance.
Markets have had a sharp run in the last few months and valuations currently seem stretched. Accordingly, we do expect some amount of consolidation in the markets with select pockets of