'Active strategies may thrive in Indian markets for a long time'

Current valuations on a one-year forward basis are higher than long-term averages. But, it is important to understand the context before jumping to conclusions. Valuations (particularly in large caps) reflect a significant improvement in ROE (return on equity) over the past few years, and strong fundamental and robust growth is expected over the next few years. However, some pockets of exuberance seem to exist, particularly in mid and small caps. While, as a policy, we avoid cash calls, we change the portfolio's composition from a relative risk-reward perspective to prepare for any potential correction.

This article was originally published on November 06, 2024.