The correction in the small and midcap space was short-lived, with indices bouncing back to record high levels. What is supporting the high valuations despite these concerns?
The high valuations are upheld by several factors despite these concerns.
Recency bias, stemming from strong returns over the past year, alongside a lack of attractive alternatives and a rally in key global equity indices, have buoyed investor sentiment.
Additionally, strong growth numbers across lead indicators such as tax collections, industrial activity, and power demand have contributed to soothing investor worries.
While the larger construct for India is positive, valuations remain elevated for most segments of the market.
However, certain segments, such as QSRs, large banks, select utilities, and commodity businesses, appear sensibly valued.
At the start of the calendar year, you were bullish on megacap stocks, especially banks. Has this view changed after the third-quarter results and the price change in the past three months?
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