Markets valued at rich multiples

Small and midcap segments are trading at premium valuations, says Vinay Paharia, chief investment officer at PGIM India.

- Vinay Paharia, chief investment officer, PGIM India

Paharia tells Nesil Staney some low-quality stocks are trading in a bubble zone. Excerpts:

How do you read the market? We think there is a big multi-year investment opportunity in investing in a diversified portfolio of high growth and high-quality stocks. This segment of the market has delivered outperforming performance over last 5-year and 10-year periods. However, in the period from April 2023-June 1, 2024, firms which had high growth and high-quality businesses have significantly underperformed those that have low growth and low-quality businesses. In this period, within the NSE 500 firms, the broad underperformance of these high growth, high-quality firms is to the tune of 35%.So, that makes us optimistic because such firms have underperformed, despite growing at a faster pace.