‘Expect short-term volatility in equity markets, but deep correction unlikely’


After hitting record highs, the markets have seen some correction in the last few sessions; the BSE Sensex closing below 59,500 level this week. What is the outlook ahead? Where are interest rates headed? Which sectors are looking good from growth and valuations perspective? Sampath Reddy, chief investment officer at Bajaj Allianz Life Insurance shares his thoughts with THE WEEK.

Equity markets rallied sharply through 2021, despite warnings on valuations. From what we have seen in the last few days, do you think there is more steam left?

Yes, valuations are quite elevated with the sharp market rally. However, corporate earnings have been quite a positive surprise amid the pandemic. In FY21, we saw India GDP contract by 7.3 per cent but Nifty EPS (earnings per share) grew by a healthy 18 per cent, against earlier expectations of around 10 per cent contraction in earnings growth. Despite the second wave, the earnings for FY22 and FY23 have not seen any…

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