Markets still have a lot of steam left: BP Singh, Executive Director & CIO-Equities, Pramerica Mutual Fund

In a chat with ET Now,BP Singh, Executive Director & CIO-Equities, Pramerica Mutual Fund, shares his views on appreciation in Nifty.

ET Now: Indian markets are up more than 20% this year. Do you think bulk of the Nifty appreciation for this financial year is over?

BP Singh: No, I do not think so. There is still lot of steam left in the market.

Market will start now discounting the earnings growth of the next three to four years and where the earnings growth rate will be much higher. It is a scenario where there is going to be the margin expansion and that is why we are seeing inflation in the economy.

When the margin expansion takes place, you find that the disproportionate rate of growth on the profit vis-à-vis the top line and it results in the PE expansion and we are now witnessing a PE expansion clubbed with the margin expansion.

If you look at the what markets witnessed between 2003 and 2005, the market went up five times because the corporate performance was coming with a lag. Market performace came between five, six and seven months but the market went up in between three and five. So, we are witnessing the similar kind of situation here.

We will all continue to doubt whether this rally is sustainable. We will continue to keep asking ourselves whether what we are doing is right but the market will continue to surprise us.