IT

Present valuations are at their historical peak due to the liquidity rush. For example, Nifty’s 10-year average P/E is 22.73 but it traded at an average of 37.08 in December. This shows the market is pricing in a strong earnings recovery in the coming quarters. This is also risky as a disappointment on this front may mean a sharp correction. Though, for now, nobody is complaining. “Liquidity is likely to be supportive in the near term, driven by expansion in global central bank balance sheets, but it is likely to peak by March’21,” says a recent Nomura report.

Naveen Kulkarni, Chief Investment Officer, Axis Securities, says, “With a one-year view, in a market structure that looks bullish, our Nifty December target is 15,300. For FY22, a 30 per cent rise in Nifty EPS (earnings

Digital opportunities, rise in work from home, companies to look for increasing efficiencies, consolidation

The Valuation Game