Market Valuations are at medium levels: Dalton Capital Advisors

How do you think valuations are placed right now?

Quite a lot of excessive valuations that we saw in late 2009 and early 2010, have gone off. Of course, earnings have also caught up and today at just about under 15 times FY11 earnings and probably under 13 times FY12 earnings.

The market valuations are at sort of medium levels. So it is not that it is extremely expensive but there is a lot of expectation in terms of policy initiatives, in terms of economic liberalisation, in terms of decontrol and stuff like that.

We saw in 2009 or even in 2007 for that matter quite a lot of the returns in the market were on account of FII inflows and if that FII inflows are somewhat tepid, then there might be some scope for correction. But it all depends on what happens in the world stage and what happens in the Budget.

Thereafter, one should take a call because the market is reasonably comfortable with these valuations. That’s why you are seeing the market trade within a very tight range.