Risk-reward ratio not favourable for markets: Vibhav Kapoor

Interview with Vibhav Kapoor, Group chief investment officer, IL&FS

Vibhav Kapoor, group chief investment officer, IL&FS, explains to Rajesh Bhayani the many risks for equity markets. He also warns that valuations are high, and if earnings growth doesn't follow, markets could fall. The rising rupee is another risk. Edited excerpts:

Price-to-earnings (PE) valuations are around 2008 highs. In 2008, markets had seen a sharp fall. Are we in a similar situation?

I would say valuations are very high, but they have not reached 2008 highs yet. In mid-caps and small-caps, PE valuations of many companies are quite high, maybe resembling 2008 high, and indicating danger. But, in large-caps, PE levels are