Expect a subdued trend in midcaps and smallcaps for some more time: Sampath Reddy
Sampath Reddy, Founder & CIO, Azurean Investment Managers, says overall, the steep growth in the earnings that we had seen in the last several quarters, is getting decelerated. As a result, overall the valuation premium that we used to enjoy vis-a-vis most other global markets is getting slightly compressed. So, we could see a subdued trend in the market for some more time, more so in the midcap and smallcap segments.
I am guessing the portfolio is not looking a very pretty picture right now and if possible, perhaps one should stay away from looking at the portfolios today with the kind of weakness that we are seeing. But do you expect this to be only a transient issue or are the next couple of weeks and months going to be full of turmoil and volatility for individual investors?
Sampath Reddy: The way the markets have moved up over the last few years, overall valuations are on the higher side, especially more so in the midcap and smallcap segment where the valuations are much more steep. Because of which, there could be a subduedness in the market overall for the very near term and even if we were to look at the quarterly numbers of the Q2, most other places, the numbers are coming slightly below expectations.
Barring the companies which are exposed towards the capital markets, such as, let us say, asset management companies or brokerage companies or companies which are exposed to wealth management, etc, in most other spaces, earnings growth has been quite weak. Even IT which has nothing to do with the domestic
