Choppy times ahead for the market: Religare Mutual Fund

First the selling and now the pace of rally. What do you make of the current market environment? Is the worst of the fall now behind us?

Vetri Subramaniam: That is hard to decide just based on few days’ movement. There are issues that have come up in terms of earnings pressure, in terms of inflation, in terms of the outlook for interest rates in India and these are all medium term issues and it will take a while for us to be able to see through these issues and look at what the short term earnings growth for FY12 looks like in India. So there is still some choppy weather ahead. Meanwhile the pace of the fall in January and early February was obviously quite dramatic.

So we have seen a quick snapback from that but there is still some rough weather that we will have to go through in the next few months. The good news is that at the lows that the market came down to earlier this month, we saw valuations which were the most reasonable in almost about 18 months. So if you were a long term investor, those were valuation levels where you could start to ignore these short term issues and focus more on the positive long term outlook for Indian equities.