Indian stock markets are not overpriced. But fundamentals are more important, said Ruchir Sharma, Head of Emerging Market Equities at Morgan Stanley Investment Management, adding that he was not unduly concerned about the Indian stock markets from the valuation stand point. He was talking to reporters on the sidelines of an Assocham event here.

Earlier, in a lecture on the Indian economy, Sharma said it had plenty of room to grow from a low base (per capita income of $ 1,500). But policymakers need to take tough decisions over the next two years to take growth back to 7-8 per cent levels, he said.

Sharma said lack of trade with neighbours, deteriorating levels of corruption, high current account deficit and inflation woes were some negative factors leading to slow growth of the Indian economy.

On the policy front, he pointed out that the same Government being in power for nine years could also be affecting the reform momentum, as there were signs of complacency.

The Indian economy is now challenged with a decadal low growth of about five per cent in the current fiscal, after being on a roll from 2004-08, with an average growth of 8 per cent.

Sharma said it was the rising tide of global liquidity (during 2004-08) that lifted all boats, including emerging markets such as India.

srivats.kr@thehindu.co.in

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