Valuations have gone back to September-2024 peak: Trideep Bhattacharya, CIO, Edelweiss MF

Valuations, which had corrected earlier, have again “gone back to September-2024 peak” after the recent rally, said Trideep Bhattacharya, Chief Investment Officer, Edelweiss Mutual Fund.

The Indian markets have seen 14-15 per cent rally and are “climbing a wall of worry and moving from macro uncertainty to a more certain environment,” he added. According to him, the markets took a dim view of elections, Trump’s tantrums and also geopolitical tensions in the first few days. “If you look at the Nifty 50 levels, you might see that pre-April 22, we were roughly around that level and if you look at a couple of days ago, after the ceasefire, the markets have gone back to those levels, which goes on to show that markets have moved on.”

Speaking to businessline, he explained that the markets are now at broadly fair value and from here on, “we will probably see two or three months of time correction before earnings start to make a comeback post the festive season.” According to him, stock selection would be the key to outperforming the markets in the near term from a valuation standpoint.

Earnings ‘froth’

From an earnings standpoint, “there was a bit of froth in mid- and small-caps, which was there earlier last year, almost about 80-85 per cent of the froth in earnings of mid- and small-caps are now out of the way. The last 10-15 per cent of earnings correction, which is remaining in terms of the froth, still needs to be done, which will happen in the next one or two quarters,” he added.

Lacklustre Q4

In his view, Q4 earnings season was “lacklustre earnings, but strong outlook”. According to him, the lacklustre earnings is more a reflection of the fact that economic decision-making has been absent given that the country was coming out of an election year and also the “touchy” geopolitical situation in recent times.

“But what companies realise is that this will resolve itself in the next few months and hence for the next year’s outlook, that is reasonably still robust, which goes on to show that all is not lost and earnings will make a comeback next year.”

Published on May 20, 2025