Motilal Oswal Financial Services’ chairman Raamdeo Agrawal, in an interview with Nishanth Vasudevan ahead of its global investor conference, spoke on various topics including markets, politics and popular investment themes. Agrawal believes that the market is currently in a healthy correction phase and that corporate earnings have surprised. However, valuations are not very cheap, and the market is well-priced. He points out that the India story is unmatched, especially when major economies like the US and China are facing problems. But he also highlights that the markets are not cheap at the current price-to-earnings (PE) multiple of 20-22 times. Foreign fund clients are expressing interest in Indian equities, but fund managers are concerned about the high PE levels and the potential market correction. To ease the upward pressure on market valuations, Agrawal suggests increasing the supply of IPOs and involving retail investors in IPO underwriting. He also discusses the impact of state and general elections on the market and advises caution due to the already built-in optimism. Agrawal opines that there is a likelihood of a 15-20% rally in the market if the current dispensation comes back with a full majority. He mentions that foreign investors are currently cautious due to political uncertainty but may become more aggressive if the political situation becomes favorable. Agrawal expresses confidence in the strength of the banking system and believes that the best for bank stocks is not over yet. Regarding HDFC Bank’s performance after the merger, he expects the businesses to do well, but highlights the challenge of reallocating holdings in mutual funds. Agrawal also shares his assessment of IT stocks, stating that the sector’s growth has slowed down, but valuations have not corrected significantly. He mentions the uncertainty surrounding the impact of Artificial Intelligence (AI) on Indian IT companies. Lastly, he discusses the rebound of new-age businesses and cautions that not all of them will deliver in the long run. The market is currently confused about how to value these businesses, but they are still considered to have some froth. Overall, Agrawal provides valuable insights into the current market trends and highlights both opportunities and challenges in various sectors.