Investors need to lower their return expectations: Amit Ganatra of Invesco Mutual Fund

economictimes.indiatimes.com:

This is because in the current environment, where the earnings growth is moderating incrementally, the scope for PE rerating is limited, Amit Ganatra, Head of Equities, Invesco Mutual Fund tells ET Wealth.

How are you reading the current market scenario? Is the buoyancy likely to persist on the back of expected interest rate cuts?
Market conditions have to be evaluated on the basis of macro outlook and earnings outlook. India’s macro outlook has strengthened in the past few years due to an improvement in the fiscal and current account deficits, and health of balance sheets in the corporate and banking sectors. This has happened at a time when the overall macro conditions for many large economies in the world are either deteriorating or, at best, remain steady. So, in that context, India is demonstrating macro outperformance to the rest of the world.

On top of that, India’s business cycle is a beneficiary of credit upcycle, leading to improved growth outcomes compared to the past. Listed corporates in India are also beneficiaries of positive trends, such as revival of investment demand, market share gains from unorganised to organised sectors, higher level of inflation leading to higher nominal growth, emergence of manufacturing as a net new growth driver, digitisation, and financialisation of savings. As a result, listed corporate earnings growth is currently outpacing the overall national growth, and India is experiencing a broad-based earnings recovery. All the above factors are driving the capital market