ETMarkets Fund Manager Talk: Earnings risk can disrupt stock boom, says Vinit Sambre of DSP Mutual Fund

economictimes.indiatimes.com:

With Nifty and Sensex trading close to all-time peak levels, Vinit Sambre, Head-Equities, DSP Mutual Fund, says there are looming risks to earnings growth over the upcoming quarters, primarily due to persistently weak consumption trends and the possibility of reduced government spending during election periods.

«Given the elevated expectations and rich valuations, there is no room for any error. Consequently, any potential downward revisions in earnings forecasts could pose a risk of corrections in the market over the next 2-3 quarters,» he warns in an interview to ET Markets. Edited excerpts from a chat:

Following a correction in February and March months, smallcaps bounced back with a bang in April. Isn't this leg of rally largely led by retail liquidity?
Vinit Sambre: India's compelling narrative of robust economic growth, fuelled by ongoing reforms and government spending into core areas, has attracted investors eager to be part of this growth trajectory. Even minor corrections prompted by non-fundamental news have become opportunities for investors to enter the market, capitalizing on businesses available at comparatively lower prices than the recent past. The fear of missing out (FOMO) further motivates sidelined investors to seize these dips.

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