Mkts to stay undervalued for 6-9 months: Reliance MF

Madhusudan Kela, Head-Equity Investments at Reliance Mutual Fund said markets are seeing forced liquidation across the world and expects the markets to remain undervalued for a period of 6-9 months. He sees no redemption pressure on equity funds, in line with normal trend and is waiting for the markets to stabilise before putting in more money.

Kela said that the government response has avoided a longer-term systemic problem and added the Sebi move would help to disclose genuine short positions in the market.

Kela feels that valuations of select companies are extremely compelling and expects the earnings to be muted. He said that the larger part of that has already been discounted by the markets.

He sees inflation falling to 7-8% by June 2009.

Amitabh Mohanty, Head-Fixed income at Reliance Capital Asset Management feels the government move with respect to mutual funds and liquidity is very reassuring and said that the RBI or Reserve Bank of India has restored a lot of faith in the money markets. He said that there was an easing in the credit market overnight rates post the RBI move. He expects some more steps from the RBI in the credit policy.

Source: Moneycontrol