Market trading in the upper range of valuations, says UTI AMC’s Vetri Subramaniam

It has been a volatile time at Dalal Street with benchmark indices, Nifty and  Sensex, coming under pressure due to the uncertainty in the global markets due to coronavirus impacting China's production capabilities.

Vetri Subramaniam, group president & head-equity at UTI Asset Management Company believes that the market currently is trading in an upper range of valuations.

When asked about asset allocation, Subramaniam said, “If you look at aggregate valuations of equities on PE, price to book, it’s a fairly mixed outcome at this point in time. It is not outrageously expensive on an aggregate level but neither is it bargain-basement cheap.”

He also noted that there isn't much divergence left in terms of valuations for large-caps and midcaps.

“At this point I would tend to be more bottom-up in my thoughts in terms of which companies looks attractive rather than trying to take a tactical asset allocation call between large-caps and midcaps,” he said.

The main concern for markets across the globe currently is coronavirus.

“As far as coronavirus issue is concerned, equity markets both in India as well as elsewhere in the world were doing quite well up to last weekend and in fact, it was the commodity market – gold, currencies, and bonds starting to react quite adversely to what they saw as perhaps a significant growth slowdown and over the weekend it has transmitted into the equity markets as well,” observed Subramaniam.

As far as growth comeback is concerned one will have to remain patient, Subramaniam said.

Talking about specific stocks, he said, “I would tend to be a bit wary of congregating excessively in some of the high PE companies. Sure, they have great growth runways but you need to figure out how you want to manage your overall portfolio risk and position size in some of the companies where long-term growth may remain attractive.”