The small-cap landscape, while being challenging, looks somewhat better: Chirag Setalvad
HDFC Asset Management, in an interview with Prashant Mahesh, spoke about Indian equity valuations, investment opportunities, and risks among other issues. Edited excerpts:
India's stock market valuations are considered rich after the near one-way move since Covid. What are your thoughts?
Valuations have moved up but they have to be viewed in the context of the overall growth environment. Large-cap share valuations are at a relatively modest 10-15% premium to their historical averages. On the other hand, mid-caps are trading at 35-40% premium and so identifying sensible opportunities is becoming quite challenging. While small-caps are also trading at a premium of 30%, the relative premium compared with mid-caps is less. In small-caps, we have seen a substantial improvement in the overall profile of the universe with better return on equity (ROEs), lower debt and higher disclosure standards. As the relative premium is less and the universe is considerably larger, the landscape in small-cap, while challenging, is somewhat better.
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Are you seeing a shift in foreign money from expensive India to cheap China?
Chinese stocks are attractive and any sign of economic stability would encourage some flows back into China. However, I don't think this will happen at the expense of India as
