Have stock prices in India moved ahead of fundamentals? Have stock prices lost touch with fundamentals? Another reason for muted earnings growth could be lack of pricing power because of existing spare capacity in the system. Revenue and volume growth, an indication of underlying demand which will sustain earnings growth over time, are yet to show any meaningful recovery. Valuations have also expanded on the back of the comfortable liquidity situation and sustained inflow into the stock market from both foreign and domestic investors.

Source: Mint August 02, 2016 18:33 UTC