Scepticism On Mid-Cap Valuations Warranted, Says Naganath Of DSP BlackRock

An employee drinks tea as he looks at a computer monitor at a brokerage firm in Mumbai (Photographer: Dhiraj Singh/Bloomberg)

Written by
Agam Vakil
Written by

Agam Vakil

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The NSE Nifty 100 Index which comprises of India's largest listed companies by market capitalisation may be at a lifetime high but when it comes to valuations, these companies look more attractive to those with relatively small market capitalisation according to S Naganath, president and chief investment officer, DSP Blackrock Investment Managers.

There is some skeptism in mid-cap valuations in some segments which may be warranted sincethey have done very well in the last 3 or 4 months relative to their ownhistorical valuations. Let's not forget that the mid-cap space comprises of manycompanies many of which are growing at extremely rapid growth rates. So one hasto take a stock specific view.

S Naganath,President and CIO, DSP Blackrock Investment Managers

According to him, a pick up in earnings growth alone can justify current valuations. Naganath expects 15 percent earnings growth in financial years 2017-18 and 2018-19. Besides, normal monsoons will boost consumption, and a recovery in the capex cycle which has sluggish over the past few years, can push markets further over the next 12 to 24 months, he added.

Naganath expects retail fund flows, which have picked up in the last six to seven months to remain robust, benefitting the mutual fund industry.

Also Read: Large-Cap Stocks Are ‘First Port Of Call' For DSP BlackRock