ETMarkets Fund Manager Talk-See no reason to turn cautious on market as earnings growth prospects upbeat: Edelweiss MF

economictimes.indiatimes.com:

MUMBAI — After the recent rally, the Nifty 50 as well as the broader market are trading at a valuation above their long-term averages, but this still doesn’t warrant a caution, believes Edelweiss Asset Management. “Using valuation as a standalone variable can be misleading and it has to be seen in the context of earnings growth.

When one juxtaposes earnings growth expectations along with current valuations, we see no reason to prune market exposure or turn cautious,” says Abhishek Gupta, fund manager — equity, at the fund house. Edited excerpts of interview with ETMarkets:With markets scaling new highs and FII inflows strong, would you say India is in the initial stage of a strong bull market phase?At macro level, a lot is going on in favour of the Indian economy starting from cooling of energy prices, well managed inflationary environment, policy action hinting towards near term peak of interest rate cycle, well managed current account deficit and strong intent by private sector towards capex cycle.

In the current fiscal, we have seen FII warming up to strong fundamentals as mentioned earlier and increasing exposure to the Indian capital market. Given we have seen the front end of market performance during the past 3 months led by strong flows and improving fundamentals, we believe the market will rather remain in a consolidation zone before clarity emerges on monsoon and recovery around the bottom of pyramid consumption.What are the key triggers for the markets and equity outlook?We are closely monitoring factors that may have a bearing on the market, such as the current inflationary environment, the interest rate cycle and our position on the curve.