November 23, 2009

Equities may correct 5-10 % in the medium term, but any correction is likely to be gradual, said Satish Ramanathan, head of equities, Sundaram BNP Paribas Mutual Fund. In an interview with Santosh Nair, he said only certain pockets of the market are ‘overvalued’ and that there is still value in sectors such as power, banking and infrastructure. Excerpts The market has to consolidate the gains made over the past few months.

We will have to see a sustained growth in earnings returns, so that investors have the confidence to take a longterm view. Our view is that a robust earnings growth will set in from FY12 onwards.I wouldn’t say that the market, as a whole, is overvalued. But certain segments definitely are. To some extent, many of the large-cap names in the software sector are, some of the leading oil & gas stocks, and some of the largecap names in the infrastructure are.

.