Manishi Raychaudhri of UBS says that markets are not yet on an all time high in terms of the valuations. Apart from the two-wheeler numbers, earnings have been pretty much in line, particularly in IT services, in the four-wheelers and in the banks, he says.

He believes strong capex cycle and continued outsourcing of services to be the theme from 13000 to 14000 mark.

Excerpts from CNBC - TV18’s exclusive interview with Manishi Raychaudhri: 

Q: 13 K, what’s the road looking like ahead from here?

A:We may be at an all time high in terms of the absolute index numbers, we are not yet on a all time high in terms of the valuations. We are currently at 17.3 times one year forward PE which compares to the previous high of 18.2 times that we had reached in May.

 We are in an environment of continuous earnings upgrade. We have seen close to about 3% earnings upgrade over the last 1 to 1.5 months as far as consensus earning numbers are concerned. So we are in an environment of earnings upgrade and maybe not too expensive valuations.We may not see a major correction in the very near term. But if one believes the secular earnings growth rate, it is in the range of 15-20%, then possibly we are fully valued in the very near term.

Q: Would you classify the levels we are at as fair value right now, given the fact that you said we are not valuations wise as expensive as we were, when we last hit our all time highs?

A: The secular earnings growth is about 15-20% in this market and currently we are at about 17 times, 17 to 17.5 one-year performance. So, we are possibly fully valued in the near term and there could be very little possibility to further re-rate from the present levels.

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