MA­HESH PATIL

The Economic Times - - Money -

If you take a nine month view, the fair value of the mar­ket could be lower than th­ese lev­els. But the mar­ket is never at fair value. It’s either over­val­ued or un­der­val­ued. Six-to-nine months down the line we would look at earn­ings growth and it should look bet­ter. Till now we haven’t seen a dou­ble-digit kind of earn­ings growth in the last 2-3 years. We should end with a dou­ble digit growth for March 2018. This cou­pled with good do­mes­tic liq­uid­ity over the next one year, will lead the mar­ket to new highs. For a long-term in­vestor, with PE mul­ti­ples of 24 on Nifty, there is de­cent money to be made as we see a mean re­ver­sion in earn­ings, and when things turn around, earn­ings can over­shoot.

On a three-year view, we are more pos­i­tive on growth out­look. You could still make low teen re­turns from the mar­ket from a three year per­spec­tive. Mar­ket gives 6% over in­fla­tion, so anything over 10% is a good re­turn for the risk pre­mium and the mar­ket can give that re­turn. Mar­kets should scale newer tops from here.

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