Motilal Oswal is among India’s wellknown market participants, and is the Chairman and Managing Director of the eponymous financial services firm. A week after the market mayhem, Bloomberg TV India went to get a pulse of the market’s mood in the Motilal Oswal Securities dealing room. Excerpts of the conversation with Oswal:

What a week we’ve had in the equity markets. Things are looking calmer now, but what’s your feeling?

For a couple of days, because of the global volatility, we saw huge swings in the markets. But fortunately it was with very less volumes and very few or small number of traders were impacted. In fact, when the dip happened, investors were coming in. The most surprising thing I saw was when one of our representatives came in with 25 cheques at 2:45 pm, and said that ‘my NAV has to be done today itself’. So when the market dips, I think there are a large number of people who are waiting to invest here. So I didn't see any kind of serious panic, except maybe from the traders or the options side.

The sceptics say that the global markets are set for a tailspin and that what we are going to see is perhaps unprecedented. They say that even India is going to get sucked into that vortex. Do you agree with that?

If you look at the overall broader trends, when markets like the US or China go down, the overall pie shrinks. So, perhaps in a smaller pie, India may appear to benefit and look bigger, but an overall global cyclical downturn could create problems for us.

From an institutional side, since you deal with multiple stakeholders, what is the sense you are getting?

I think if you look at the interest in India, next week is MOFSL’s global investor conferences, and we are seeing the highest level of participants come in here. I think 115-120 companies coming in. So the interest in India is increasing. On the domestic side, you are seeing the way the flows are coming in with domestic MFs.

MOFSL is 16-17th in terms of equity AUMs, but we are the fastest growing in terms of the AUM corpus. I have not seen this kind of money come in on a daily basis in the last 15-18 months. So, the long-term domestic investor is putting in money here. The international markets have slowed down, but everyone is watching what will happen with India. So from that perspective, I remain an optimist.

We saw an unprecedented bull run from September 2013 to now where the markets went up substantially. But there have been a lot of hiccups, and every quarter's earnings show the recovery has been pushed down by another quarter or two. So where are we on the path of recovery?

Let’s first look at the macro-economic indicators. Most of the indicators are favourable. But if you look at the corporate earnings, the turnaround has gotten postponed by a couple of quarters from here. Though we do see some good signs — IIP is slightly better and infrastructure projects have started taking off. If you look at the per-day rate of roads getting built, you can see some green shoots coming in. But yes, I agree that the biggest issue is that private sector investment is not taking off. Infrastructure companies’ balance-sheets are still in serious stress.

So in terms of the Sensex and Nifty levels, what is your own prognosis?

There has been an earnings downgrade, but simultaneously the market has corrected as well. At current fiscal earnings, the market is at about 17x, which is not high. It's not low either, but historically, it is below the 10-year averages. If you look at FY17 earnings, we are, maybe, at about 14-14.5x P/E. So we are very reasonably valued. In fact, it becomes attractive for the longer term, when the cycle is just moving up.

How are you looking at the interest rate cycle right now?

You have already seen three interest rate cuts, and I think the fourth should happen anytime — hopefully by December or even before that.

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