Here is why:ValuationsThe Sensex trades at an estimated price-earnings ratio of about 21, the steepest among equity benchmarks in the region after New Zealand. For now, the rally has outpaced the outlook for profit growth, with UBS saying consensus earnings for Nifty are likely to be cut 7-8 percent. Fund Flows ModeratePersistent buying my domestic equity mutual funds has time and again provided a buffer against foreign outflows. Costly OilMoody’s Investors Service last week said India, the world’s fastest-growing oil user, risks missing budget targets because of higher oil prices. While elevated crude prices stoke inflation, a spike also weakens the rupee, which causes foreigners to sell Indian assets.

Source: Mint September 03, 2018 08:48 UTC