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Equity market valuations are overstretched, says BNP Paribas' Manishi Raychaudhuri

Updated : September 10, 2020 01:03 PM IST

Equity market valuations are overstretched and markets are consolidating, said Manishi Raychaudhuri Asian equity strategist, equity cash Asia Pacific, BNP Paribas on Thursday.

Equity market valuations are overstretched and markets are consolidating, said Manishi Raychaudhuri Asian equity strategist, equity cash Asia Pacific, BNP Paribas on Thursday. Speaking with CNBC-TV18, Raychaudhuri shared his views and outlook on markets.

“Last few days we have seen sideways movement, we have seen corrections in the developed markets particularly the US-led by the tech universe which was in a way appearing over-owned. This is a reflection of that happening across the emerging markets (EMs) as well and that is why we are seeing sideways movement which in a sense is kind of a time correction across most of the EMs right now. If you look at China, if you look at other north-Asia markets like Korea or Taiwan, the trend is very similar. If you draw up a chart of the Sensex, you will find that over the past six weeks right from early August, it has just been flat moving in a very narrow range and I think this is a reflection of the fact that valuations have become overstretched while the market is moving up, earnings estimates were coming down and I think the market is taking that into account. So this sideways movement is achieving two things - one is it is driving down the valuations slightly because of the time correction phenomenon that I talked about and also because earnings estimates have now started improving. Across EMs, across emerging Asia we are now seeing earnings estimates improvement,” he said.

#CNBCTV18Market | BNP Paribas' @Manishi_R speaks to CNBC-TV18, says there may be further unlocking in Reliance Retail's assets pic.twitter.com/OAdmzPlSlD
— CNBC-TV18 (@CNBCTV18Live) September 10, 2020

When asked about a possible further unlocking in Reliance Retail assets, he replied, “I wouldn’t comment on stock specifically but in general I think there are certain sectors in India which are attracting foreign investments more. Retailing, telecom services are those obvious candidates because they leverage on a huge population base in India—a significant part of which are likely to become affluent over the longer-term. It may not happen now considering what has happened over the last six months to one year but they would form the bulwark of a very significant potential consumer market base for companies in various different sectors. Therefore I would believe that this flood of a private equity investment or even other secondary market investment will possibly continue in the near-term.”

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