New Delhi, July 21 -- Earnings need to pick up and even a minor disappointment could trigger sharp volatility given that the valuations are still driven by past growth, according to Kalpen Parekh of DSP Mutual Fund.

"As we head into the upcoming earnings season, we believe the easy phase of earnings growth is behind us," said Parekh, managing director and chief executive officer at the company that manages over Rs.2 lakh crore in assets.

The next leg of earnings must come from top-line growth, according to Parekh. Current revenue growth is a modest 4%, and a meaningful pickup will require a recovery in demand as margin-led growth is fading, he said.

Valuations reflect past strong earnings growth, but not the recent slowdown to single-d...