'Index and smart-beta funds will be key to modern portfolios'

How is your team viewing the current market valuations and preparing for possible corrections? The narrow market, represented by the Nifty, is trading at 20x 12-month forward earnings and in line with its long-period average of the last 10 years of 20.5x. Valuations are reasonable, considering the likely earnings growth of around 15 per cent over the next two years. But, broader market valuations comprising mid and small companies are well ahead of their long-period averages. They're likely to witness some loss of earnings momentum relative to the past two years. This requires a cautious approach. But, we don't see any major risk from a valuation erosion perspe

This article was originally published on October 29, 2024.