We are in a bull market where 19-20x peak will sustain as long as earnings growth continues: Vinod Karki

economictimes.indiatimes.com:

Vinod Karki, Equity Strategist, ICICI Securities, says around 19-20 PE will sustain in this environment of growth and the way the overall interest rate environment is moving. This will be the peak of market valuation.

It also implies that if earnings keep expanding by 15% range, then the market will keep expanding at that rate right. So market valuation peak does not mean that prices will stop expanding so long as the earnings growth is there.What are your views on agri chemicals, especially specialty chemicals as they have been under pressure and facing inventory issues? The SRF commentary seems to be indicating that perhaps in the second half, things could improve. Do you subscribe to this or do you want to wait for strong evidence that indeed things are improving?These are the initial concerns and we have seen that these chemical companies have gotten significantly derated over the last several years.

But all said and done, these are still companies which should not be very expensive like consumer companies or something like that which are very high quality, less cyclical businesses. There are concerns that the valuations are at a level which cannot expand further and these growth concerns, demand concerns are I think the perfect situation where the stocks could peak out in terms of valuation in my view.

Wherever the growth continues to surprise or be quite strong robust, they will continue to sustain those multiples but I do not think that any further re-rating in these stocks in terms of valuation is possible.What are your thoughts on commodity rally? Crude is back at $83, and the China stimulus talk is fuelling a big rally in commodities. Is it more transitory and temporary or are you shifting from commodity