{"id":170741,"date":"2023-02-09T05:37:34","date_gmt":"2023-02-09T05:37:34","guid":{"rendered":"https:\/\/precoinnews.com\/?p=170741"},"modified":"2023-02-09T05:37:34","modified_gmt":"2023-02-09T05:37:34","slug":"premium-valuations-a-big-challenge-for-markets","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/","title":{"rendered":"‘Premium valuations a big challenge for markets’"},"content":{"rendered":"

‘The reason being we cannot let premiums go beyond a certain point.’<\/strong><\/p>\n

Equity valuations are unlikely to expand further unless there are surprises on the earnings front or developed economies do much better than expected, says Taher Badshah<\/strong> of Invesco MF<\/p>\n

In conversation with Abhishek Kumar<\/strong>\/Business Standard<\/em>, Badshah shares that the room for MFs’ outperformance is limited in 2023 due to a predictable earnings environment.<\/p>\n

In 2022, we saw companies report strong earnings growth. Do you see that continuing?<\/strong><\/p>\n

While 2022 was more about top-line (revenue<\/em>) growth, 2023 could be better from a bottom-line (profit<\/em>) perspective.<\/p>\n

The revenue growth was strong in 2022 due to a lower base, but profits didn’t go up as much due to higher costs.<\/p>\n

Since a low base effect is not there in 2023, revenues might grow at a modest pace but profits may surge due to cooling commodity prices.<\/p>\n

How much of a drag can India’s relatively higher valuations be on 2023 equity performance?<\/strong><\/p>\n

In 2022, domestic equity returns were muted, but we still did better than most other markets.<\/p>\n

Hence, India’s valuations are lower compared with 2022, but the premium over the rest of the world has expanded (as they went through corrections).<\/p>\n

Historically, India has been trading at a 10-20 per cent premium to developed markets and 30-50 per cent to other emerging markets.<\/p>\n

These ratios have now gone up to around 35 per cent and 80 per cent, respectively.<\/p>\n

This can emerge as a challenge for the Indian market because we cannot let premiums go beyond a certain point, even if the economy does relatively better than others.<\/p>\n

How can valuations improve, considering robust domestic flows?<\/strong><\/p>\n

Premiums seem to be stabilising because India does not seem to be in a position to deliver any major earnings surprise.<\/p>\n

Only faster-than-expected economic growth can propel valuations further.<\/p>\n

Overall, we see less action in the equity market, considering high valuations and low prospect of earnings surprises, which was a common affair in the post-pandemic period.<\/p>\n

However, India might benefit from positive developments on a global level, with either the US and Europe seeing better economic outcomes than expected or the Russia-Ukraine crisis coming to an end.<\/p>\n

As an active fund manager, do you find the predictable earnings scenario challenging?<\/strong><\/p>\n

Certainly. In a situation of predictability, the pockets of alpha generation shrink.<\/p>\n

You don’t get enough room to forecast and position your portfolios for outperformance.<\/p>\n

The scope was higher in the post-Covid phase due to uncertainties all around and markets not being able to fully assess the economic situation.<\/p>\n

Cut to 2023, the economy is normalised and fewer quarters can throw a surprise.<\/p>\n

Will global slowdown benefit Indian companies by way of cooling commodity prices?<\/strong><\/p>\n

There are two ways to look at it. A slowdown in the US can cool demand for commodities but that can be offset by the opening up of China.<\/p>\n

Last year, there was almost nil incremental demand for oil from China due to the Covid situation.<\/p>\n

Also, the supply of commodities hasn’t been very strong and incremental growth seems limited.<\/p>\n

This is because investments in the production of key commodities like oil and gas have not happened in a big way for some years due to environmental, social, and governance considerations.<\/p>\n

What’s your strategy for managing funds in 2023?<\/strong><\/p>\n

At present, there seems to be consensus in the market that banking and financials will continue to do well.<\/p>\n

It looks like banks still have the momentum to go up further.<\/p>\n

Credit growth has remained strong and their balance sheets are in very good shape.<\/p>\n

There’s also a possibility of recovery in rural demand.<\/p>\n

There are signs, but we still do not have any conclusive reasons.<\/p>\n

Sectors like agriculture, cement, and automotive can also benefit from softening commodity prices.<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

‘The reason being we cannot let premiums<\/p>\n","protected":false},"author":3,"featured_media":170740,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23051],"tags":[],"yoast_head":"\n'Premium valuations a big challenge for markets' - Pre Coin News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"'Premium valuations a big challenge for markets' - Pre Coin News\" \/>\n<meta property=\"og:description\" content=\"‘The reason being we cannot let premiums\" \/>\n<meta property=\"og:url\" content=\"https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/\" \/>\n<meta property=\"og:site_name\" content=\"Pre Coin News\" \/>\n<meta property=\"article:published_time\" content=\"2023-02-09T05:37:34+00:00\" \/>\n<meta name=\"author\" content=\"mediabest\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/precoinnews.com\/wp-content\/uploads\/2023\/02\/Premium-valuations-a-big-challenge-for-markets.jpg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"mediabest\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/\",\"url\":\"https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/\",\"name\":\"'Premium valuations a big challenge for markets' - Pre Coin News\",\"isPartOf\":{\"@id\":\"https:\/\/precoinnews.com\/#website\"},\"datePublished\":\"2023-02-09T05:37:34+00:00\",\"dateModified\":\"2023-02-09T05:37:34+00:00\",\"author\":{\"@id\":\"https:\/\/precoinnews.com\/#\/schema\/person\/ad0e9920e03d3b41c7ad02a18375d76a\"},\"breadcrumb\":{\"@id\":\"https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/precoinnews.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Business\",\"item\":\"https:\/\/precoinnews.com\/category\/business\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"‘Premium valuations a big challenge for markets’\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/precoinnews.com\/#website\",\"url\":\"https:\/\/precoinnews.com\/\",\"name\":\"Pre Coin News\",\"description\":\"precoinnews.com\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/precoinnews.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/precoinnews.com\/#\/schema\/person\/ad0e9920e03d3b41c7ad02a18375d76a\",\"name\":\"mediabest\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/precoinnews.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/f5f13cb3b94fc348d515c0951f6ca073?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/f5f13cb3b94fc348d515c0951f6ca073?s=96&d=mm&r=g\",\"caption\":\"mediabest\"}}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"'Premium valuations a big challenge for markets' - Pre Coin News","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/","og_locale":"en_US","og_type":"article","og_title":"'Premium valuations a big challenge for markets' - Pre Coin News","og_description":"‘The reason being we cannot let premiums","og_url":"https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/","og_site_name":"Pre Coin News","article_published_time":"2023-02-09T05:37:34+00:00","author":"mediabest","twitter_card":"summary_large_image","twitter_image":"https:\/\/precoinnews.com\/wp-content\/uploads\/2023\/02\/Premium-valuations-a-big-challenge-for-markets.jpg","twitter_misc":{"Written by":"mediabest","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/","url":"https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/","name":"'Premium valuations a big challenge for markets' - Pre Coin News","isPartOf":{"@id":"https:\/\/precoinnews.com\/#website"},"datePublished":"2023-02-09T05:37:34+00:00","dateModified":"2023-02-09T05:37:34+00:00","author":{"@id":"https:\/\/precoinnews.com\/#\/schema\/person\/ad0e9920e03d3b41c7ad02a18375d76a"},"breadcrumb":{"@id":"https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/precoinnews.com\/business\/premium-valuations-a-big-challenge-for-markets\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/precoinnews.com\/"},{"@type":"ListItem","position":2,"name":"Business","item":"https:\/\/precoinnews.com\/category\/business\/"},{"@type":"ListItem","position":3,"name":"‘Premium valuations a big challenge for markets’"}]},{"@type":"WebSite","@id":"https:\/\/precoinnews.com\/#website","url":"https:\/\/precoinnews.com\/","name":"Pre Coin News","description":"precoinnews.com","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/precoinnews.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/precoinnews.com\/#\/schema\/person\/ad0e9920e03d3b41c7ad02a18375d76a","name":"mediabest","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/precoinnews.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/f5f13cb3b94fc348d515c0951f6ca073?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/f5f13cb3b94fc348d515c0951f6ca073?s=96&d=mm&r=g","caption":"mediabest"}}]}},"_links":{"self":[{"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/posts\/170741"}],"collection":[{"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/comments?post=170741"}],"version-history":[{"count":0,"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/posts\/170741\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/media\/170740"}],"wp:attachment":[{"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/media?parent=170741"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/categories?post=170741"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/tags?post=170741"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}