Is equity market heading for a prolonged slowdown? Vetri Subramaniam answers
«It can work it off by coming down sharply, as it has done a few times in the past or it can just go nowhere for a while and allow the earnings to catch up because as a result valuations will automatically correct as those earnings come through,» says Vetri Subramaniam, CIO, UTI AMC.
For the first time, there is real pain and agony to be felt in this market after many-many years. Do you think we have taken a decisive turn in equity markets and we could be in for a long winter?
Vetri Subramaniam: This business of predicting whether it will be winter, summer, spring is not really my forte. And after 25-30 years of doing this, I have come to the conclusion that nobody can really forecast this stuff beforehand. I will just stick to what I have been telling you and maybe that may have been our last conversation as well. The markets were pretty pricey in terms of valuations and history has taught us that when the market is pricey in terms of valuations, there are two ways in which it can work it off.
It can work it off by coming down sharply, as it has done a few times in the past or it can just go nowhere for a while and allow the earnings to catch up because as a result valuations will automatically correct as those earnings come through.
So, you can never know beforehand what it is. But you should always expect these kind of periods during any investor's journey of investing and people will just have to sort of tackle this as part and parcel of what is required for investors to create wealth in the long term in
