Equity markets are now expensive, can remain so: DSP Mutual Fund

K.R. Srivats New Delhi | Updated on July 08, 2020

Kalpen Parekh, President, DSP Mutual Fund

PE multiple not the only valuation metric to assess equities, says Kalpen Parikh

DSP Mutual Fund sees the current equity markets as “expensive” even while indicating that they could remain so in the coming days.

This fund house also sees near-term interest rates remaining stable with a downward bias. The quantum of how much interest rates will fall will be much lesser than what they had already fallen, said Kalpen Parekh, President, DSP Mutual Fund.

“In one word — Yes; are equity markets expensive. Will they remain expensive? They can remain expensive”, said Parekh.

The market has moved up with scant recognition of the adverse impact of Covid on economic growth, he said. “We are cautious on growth recovery and hence believe that markets may have moved ahead of fundamentals”, Parekh said.

He said that price-to-earnings (PE) cannot be the only measure for assessing the equity market and has to be balanced with other valuation metrics like price to cash flow, dividend yields and price-to-book besides interest rates.

Parekh added that interest rates in the near term could trend lower marginally. But in the medium- to long-term rates could go up again, he added.

Published on July 08, 2020

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