Risk-off environment in emerging markets (EMs) is the reason why both, the Indian rupee as well as the Indian stock market are getting affected, said Ashwini Agarwal, co-founder and partner of Ashmore Investment Management India.

“Some issues(factors) like stronger crude oil in India’s case in particular doesn’t help given our import bill and given the current account deficit (CAD). So that is again taking a toll on the sentiment,” he said.

“If you rollback the clock to November-December 2017, I would have said that the market was across the board quite expensive back then. What has happened in the first half of this year or first eight months of this year is that quality has continued to rally. It has been a very narrow rally led by high quality expensive stocks which have only gone on to become too expensive. At the same time, we have seen a significant correction in the midcap indices where the index itself is still down about 15 percent year-to-date compared to the Nifty or the Sensex which are in the proximity of all-time highs," he added.

In terms of stocks, he said there are many individual stocks which are very reasonably priced. "Fundamentals are improving and hopefully they should continue to deliver very solid earnings over the next two-three years," he further mentioned.