A study of economic history shows that a country whose population is getting younger turns in a robust economic performance. India will remain in a demographic sweet spot for the next 20 years. Reap the benefit of growth by investing in equities, says Jayesh Shroff, fund manager, SBI Mutual Fund in this interview with Sanjay Kr Singh.

With the Sensex trading at a 12-month trailing PE of 21, is the market becoming expensive?

If you look at the figure of 21, the market might appear expensive. But in my view it is not. FY09 was an extraordinary year in terms of economic, sectoral and company-specific performance. It is unlikely to be repeated. So we should not be looking at the trailing PE, especially for FY09.

Earlier, most people expected a flat Sensex EPS in FY10. However, as the quarters progress, there will be upgrades of earnings estimates. I feel analysts are behind the curve in this regard.

If you look at monthly sales numbers, they look good. We have seen surprising strength in two-wheeler and four-wheeler sales. The news on cement dispatches is positive and consumer non-durables have been stable. These healthy growth numbers are likely to be reflected in the quarterly results. This year most companies will also get the benefit of lower raw material costs.

What are your Sensex EPS estimates for FY09 and FY10?

The EPS estimate for FY09 was around Rs 850. As for FY10, at present the consensus is at around Rs 880-890. As we go forward, it is likely to cross Rs 900.

... contd.