Nifty's earnings for FY21 likely to be in excess of 20%: UTI MF

The slowdown in the equity inflows into the mutual funds is not surprising as Indian investors are putting their learnings of the last 10-15 years into practice, says Sanjay Dongre, EVP and senior fund manager, equity of UTI Mutual Fund.

“Today, when we look at the market valuations, the levels are closer to an all-time high. If people are getting a little fearful when the market is closer to an all-time high, I am not surprised. I am sure when the market becomes volatile, when the market valuations decline, the Indian investors will come and find the higher allocations to the equity they will be doing,” he said.

“The market is quoting at about 18.5 times one year forward earnings while the last five-year average is about 16.8 times, the 10-year average is 15.6 times. So clearly, the market is quoting at above-average valuations. When you look at the market from price to book multiple, the market is quoting at about 2.62 times one year forward while the last 10-year average is 2.42. So clearly, the market is quoting at a higher valuation. So to that extent, some investors might get jittery,” he observed.

The market is not looking at the base-case scenario of gross domestic product (GDP) growth less than 5 percent. Going forward, the market is expecting some kind of recovery in the GDP growth as far as the economy is concerned.