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Corporate earnings leading this bull run; what could be the next big risk? Gautam Duggad explains
Nifty earnings have compounded at 22% from FY20 to FY24, with a price-to-earnings ratio of about 20 times. Domestic institutional flows have been strong, while unknown risks, election outcomes, and interest rate cycle reversal pose potential challenges for the market. Where things are a little bit expensive is clearly mid and smallcaps. The midcap index is trading at a 30-40% premium to Nifty. Now obviously, there are pockets in midcaps where things have run ahead of themselves, earnings need to catch up.