Corp earnings will improve, rates to stay lower in FY19: DSP BlackRock

Corporate earnings are expected to pick up while interest rates will remain on the lower-side in FY19, believes Anup Maheshwari, Chief Investment Officer, DSP BlackRock Mutual Fund.

“We expect interest rates to go lower over a period of time and there is a secular shift in rates. The RBI may cut rates at a time when it deems appropriate based on data available,” Maheshwari said on the sidelines of a press conference held here to launch DSP BlackRock Equal Nifty 50 Fund.

He further said that when valuations are looked at in terms of price-to-earnings the market then looks expensive but the fund house prefers to look at price-to-book.

At a time when earnings are low, price-to-earnings may not give a better picture. Therefore, price-to-book is the more appropriate measure to look at valuations, Maheshwari said.

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"We are entering a lower interest rate and lower inflation type of environment which will also result in earnings growth. During high inflationary times, earnings growth tends to be higher. The opposite could happen with low inflation. So, we are looking more at a 10-15 percent range of corporate earnings," he said.

Maheshwari feels equity is a better asset class in the longer-term and will add more value to the portfolio.

The fund house likes financial services, consumer discretionary, and select energy stocks for investments.

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