There can be some more correction before deep value emerges in market: Dhananjay Sinha

economictimes.indiatimes.com:

Dhananjay Sinha, Co Head of Equities & Head of Research, Systematix Group, points out that Nifty's average earnings are around 4-5%, with a valuation of about 20-22 times. This results in a high PEG ratio compared to the S&P 500. It's crucial to monitor the future earnings trend and see if the margin pressure in this quarter will continue.

On Tuesday, sector-wise performance has not been that great, a case in point being the auto sector. After Eicher Motors’ numbers, all the two-wheeler counters once again seem to be under pressure. There are two debates going on: first, the consumption story could or could not play within the auto space and the other one is some valuation comfort that some of these investors are finding in the auto space. What is your reading for the particular sector?
Dhananjay Sinha: In the auto space, the views are kind of fairly differentiated. There is no longer a uniform view across the sector. There is some expectation with respect to the provision that has been given in the budget, which is basically that there has been income tax cut, etc, and the RBI has also cut the rates. There is also an expectation that RBI might actually start some amount of relaxation as far as the retail lending stringency is concerned.

So, it is quite possible that there might be some impetus that might evolve over a period of time, I think that is what the market is expecting. The other thing that people are expecting is with respect to the margins. I would say the margin pressure has been there, but I would