Buy bluechips trading at 10-12 times P/E: Raamdeo Agrawal

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

Raamdeo Agrawal, Director and Co-Founder, Motilal Oswal Financial Services, is surprised by the extent, strength, and longevity of the rally. However, he was quick to add that valuations don't look extended after the recent rally.

He feels it is a good time to build a portfolio with bluechips trading at 10-12 times price to earnings. "At 8,000 or so, the market was very pessimistic. That was an opportunity to buy and invest without looking at anything. Even now, I don't think valuations are anything to be worried about if one is a long-term investor with 3-4 years horizon. I think at 10-11-12 P/E multiple for the broader market and more like 8-10-12 times for individual companies are times to build your portfolio with bluechips."

Commenting on Q4 earnings, he said numbers are on expected lines with some positive surprises.

He sees FY10 Sensex EPS at Rs 880-900. "There have been no downgrades yet. I think FY10 earnings are likely to be in line with FY09."

Agrawal is surprised by the robust demand in cement companies and said he will remain invested.

Also see:

Rally doesn't indicate return of bulls: Shankar Sharma

Experts unsure if rally will last till poll results are out  

Here is a verbatim transcript of the exclusive interview with Raamdeo Agrawal on CNBC-TV18. Also see the accompanying video.

Q: It's been a good rally, 40% from the lows. Do you see more legs to it or would you start getting cautious before election results?

A: I think this rally has been quite extended. I am very surprised in terms of its strength and longevity. But my sense is that one big event which the market is seeing is the installation of a new government. Around that time, we should see whether the market will peak out at 11,000-12,000-13,000. So, one round of rally probably will be over. But a lot depends on behaviour of foreign Institutional Investors nowadays. We also have to have an eye on what's happening in terms of broader trend.

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