ETMarkets Smart Talk: Caution ahead! Small & midcap stocks can see correction and so can largecaps: Sahil Kapoor
“Small and midcap stocks can see a correction and so can large caps as valuations have been stretched overall,” says Sahil Kapoor, Head of products and Market Strategist, DSP Mutual Fund.
In an interview with ETMarkets, Kapoor said: “Gold can benefit from the global chaos and volatility in other assets. It has all the ingredients to do relatively better than other assets” Edited excerpts:
A mixed October for markets in the middle of India's festive season. What is capping the upside is it geopolitical concerns or valuations?
Whenever markets trade at expensive valuations, it find reasons to correct. Currently, Nifty is trading at 22.7 times trailing earnings and at a return of equity (ROE) of 13%.
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The 10-year GSec is earnings about 7.35% and a AAA Corporate bond yields 7.85% at this time. The attractiveness of equities is diminished with attractive opportunities present in bonds.
Geopolitical concerns can overshadow short-term moves if they escalate but we don’t have the expertise to know when and how much. It is prudent to remain conservative as of now.
What is your take on the results which have come out recently? Any company/industry that surprised you? What is the general sense you are getting from the management commentary about future earnings?
One trend is clear. Sales revenue growth is gradually slowing. Bellwether, FMCG & IT, and other companies
