1 day ago
Gupta Says Mid- and Small-Cap Valuations Reflect Growth
Radhika Gupta says the Indian stock market has had a quiet stretch after earlier strong gains.
She thinks India’s economy is still in good shape.
Some smaller and medium-sized companies are growing quickly, which she says helps explain why investors accept higher prices for their shares.
She says these companies can still have periods when prices get too excited or when bargains appear.
Larger companies remain important, though some may need stronger growth to lift their shares.
Gupta says banking is showing positive signs, while IT earnings need to improve.
She also expects people to keep using monthly investment plans, even if some pause them when markets are bumpy.
She thinks those pauses will make only a small difference overall.
Radhika Gupta says strong earnings growth and favorable price-to-growth measures help justify higher mid- and small-cap valuations.
She says Indian economic fundamentals remain sound despite volatile markets, foreign investor selling and elevated crude prices.
Gupta describes the market index’s two-year period of little movement as a normal part of equity investing.
She sees banking conditions improving as credit growth returns, while IT needs an earnings-growth recovery.
Gupta expects SIP cancellations during volatile periods but says their effect on overall SIP inflows should be marginal.
- Who
- Radhika Gupta, MD and CEO of Edelweiss Mutual Fund.
- What
- Gupta discussed market conditions, company valuations, investment products and investor flows.
- Where
- India’s financial markets.
- When
- In an interview; no date is stated.
- Why
- She attributes investor interest in mid- and small-cap stocks to their growth and says earnings growth helps support their higher valuation multiples.
Key facts
- Interviewee
- Radhika Gupta, MD and CEO of Edelweiss Mutual Fund
- Market backdrop
- The index had been flat for two years, according to Gupta.
- Mid- and small-caps
- Gupta says earnings growth and price/earnings-to-growth measures support their higher valuations.
- Large-cap outlook
- She says banking looks good as credit growth returns, while IT needs an earnings-growth turnaround.
- SIFs
- Gupta says their first-year growth exceeded her expectations.
- SIP flows
- She expects volatility-related pauses and cancellations to have a marginal effect on the overall SIP book.
- Distribution
- She says lower margins and rising volumes make efficient business models increasingly important.
Sources
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