The markets are poised at an interesting juncture. After the recent lows, one can see some buying emerging in select pockets based on stock value and the fundamentals. Nilesh Shah, managing director at Kotak Mahindra Asset Management Company says markets are at ‘fair value’. If you are keen to understand how you need to trade in the current market conditions, here are some key takeaways from an exclusive conversation with Nilesh Shah.
Nilesh Shah’s 6 key insights on the markets at the moment – Markets at fair value, invest more in large caps
Nilesh Shah outlined that “this is a fair value market.”. According to him, this entails that the “allocation to equity should be equal weight or neutral to your risk profile and investment objective.” He highlighted that the large caps are trading below their historical averages and small and midcaps are close to historical averages. In this scenario, he advises that, “you should be investing more in large caps. You should be overweight there.” However, for small and midcaps, he advised that one should wait for some more correction “before you become equal weight.”
He also pointed out the need to keep some amount of cash ready, “if the market continues to go down and become cheaper, you can keep on increasing your allocation and become overweight equity.” Similar to what the old saying suggests, don’t put all your eggs in one basket, Shah explained, “don’t put all your money in one go.”
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Earnings have been a big worry for the markets and Nifty earnings have been averaging bout Rs 250 rupee earnings per share every quarter. Shah is optimistic about the fourth quarter, “It is generally better than the first three quarters because of the festival season boost, etc. I think Nifty earnings should be somewhere around Rs 262 -275 per share in Q4.”
In terms of expectations for FY26, “we move from high single-digit earnings growth to low double-digit earnings growth for FY26. We should be anywhere between Rs 1,150 -1,200 per share,” added Shah.
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