Is the broader market looking a little overheated? Shridatta Bhandawaldar answers

economictimes.indiatimes.com:

«And the predominant reason for that was effectively the core earnings growth was actually relatively subdued. You experienced little bit of earnings downgrade for four quarters in between for the financial year 23,» says Shridatta Bhandawaldar, Canara Robeco.How do you read the current market status? Do you see there is near-term consolidation or you think the party that we are witnessing is about to get over? And specifically talking about mid-caps, do you think it is an overvalued space now?As far as markets are concerned, are they at new high? Yes, of course they are at new high. But one has to step back and think as to why they are at new high and why did not they go to new highs for 18 months or 15-16 months in between.

And the predominant reason for that was effectively the core earnings growth was actually relatively subdued. You experienced little bit of earnings downgrade for four quarters in between for the financial year 23. And on top of that, you had predominantly the cost of capital, which means the interest rates moving against you between say October of 21 to December of 22.

As both these risks are receding and as you are seeing that the earnings are stabilizing, they are not accelerating yet but as they are stabilizing and in India, earnings are still growing, correct? So in 15 months, while the market has not gone anywhere in between, the earnings have increased by whatever 10% to 15%. So as the rollover is happening, that is where the new earnings are getting rolled over. And to that extent, market is actually also achieving new highs.