Market not cheap even after 10% cut; remain cautious on earnings growth: UTI MF's Vetri

Even as the market has corrected around 10 percent from its high points, a leading fund manager with UTI AMC believes that valuations cannot yet be called cheap.

“We cannot classify them (valuations) as cheap, but as ones which are not as expensive as they were some months ago," Vetri Subramaniam, Group President & Head-Equity at UTI AMC told CNBC-TV18 in an interview.

"As a fund manager, (we have seen) some declines in stocks which have been much sharper compared to blue chips, but for the broad markets, it cannot be categorized as having undergone deep correction.”

He further highlighted that though earnings have progressed well, one should continue to stay cautious . Last year, there were continuous cuts for FY18 estimates, which is not the case for FY19.

"The implied growth consensus is around 25-27 percent. This is not suggestive of significant acceleration in economic growth, but that of a base effect. So, we would still be cautious on economic growth,” he told the channel.

Speaking on the economy, Subramaniam highlighted that there has not been much strength in the capex cycle, while capacity utilization has also not risen dramatically. "Therefore, capex itself is at a weak ebb."

In case of banks, he said that stringent provisioning requirements will affect banks’ ability to provide project financing as well.

Still, even after the recent levy of LTCG, "equities are still likely to outperform fixed income over the long term," he said.