The rich valuation of the Indian market should not be a matter of concern for long-term investors, said Chirag Setalvad, Head-Equities at HDFC Mutual Fund in an interview with the Economic Times (ET).
"The Nifty trades at 19 times (one-year forward PE) which is a 10-12% premium to its 10-year historical average of 17 times. A 10-15% premium should not make investors nervous as long as they have a long-term investment horizon and a tolerance for volatility," Setalvad told ET Now.
Setalvad said a SIP-driven strategy continues to make sense for long-term investors as the Indian economy is faring relatively better and some premium is understandable.
On his favourite sectors, Setalvad said he favours sectors that have a combination of attractive fundamentals and sensible valuations.
He said that the domestic pharma growth appears to be strong and pricing pressure in the US is somewhat plateauing while valuations. He is also positive about IT stocks.
"IT companies are growing reasonably despite some slowdown, while pressure on margins is likely to ease. The valuation of IT companies is at a bit of a premium to their historical levels," Setalvad told ET.
Disclaimer: This article is based on an ET interview. The views and recommendations given in this article are those of the analyst. These do not represent the views of MintGenie.