Scope for Nifty and generally markets in India to go up are tremendously high: Deepak Shenoy
Deepak Shenoy, Founder, Capital Mind, says “longer term, the scope for the Nifty and generally the markets in India to go up are tremendously high simply because in relative terms we seem to be in better economic shape as a country, corporates are relatively less leveraged and overall the triggers coming in the future will give scope for interest rates to correct and therefore the economy to get some kind of respite. But that will probably take a year to show up.”
The market was overbought a month ago. The market is overbought right now and the market could remain overbought for a month from now. What is the best strategy to deal with this kind of a market where valuations are expensive, flows are volatile, but if you are not selling, you are actually making more money?
The market is not actually overbought in the sense that its earnings have considerably grown compared to previous years, the same quarter.
The Nifty PE ratio is all wonky because the way they calculate the PE ratio is they add up the last known earnings of the constituents. The last known earnings of HDFC Bank did not include the HDFC, which it has now merged with.
So, HDFC is no longer in the index, but its earnings are not getting considered as part of the Nifty earnings and therefore PE ratio looks a little bit higher than it is. It is about 22 to 22.5, but it is actually about 21 times trailing earnings.
This is not very expensive.
Therefore, I do not think it is overbought in any meaningful way. I also feel that longer term, the scope for the Nifty and generally the markets in India to go up are tremendously high simply because in relative terms we seem to be in better economic shape as a country, corporates are relatively less leveraged and overall
