The falling market has created some pockets of comfort in the large-cap space and also among small- and mid-cap stocks, despite them trading above their long-term averages, says Nimesh Chandan, chief investment officer at Bajaj Finserv AMC. He tells Ananya Grover that investors should exercise caution while investing in initial public offerings (IPOs). Excerpts:
Nifty 50 has fallen more than 15% from its September peak, and broader markets have declined even more. How long will the correction last?
When discussing corrections, most people focus on price correction. However, the correction in valuations is more relevant. In the case of the Nifty 50, valuations are now close to its long-term average. While mid-caps and small-caps remain above their historical averages as a category, the recent correction has some pockets of valuation comfort even in these categories. Calling a market bottom is difficult, but it’s evident that valuation comfort has improved, particularly in large-caps.
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The GDP growth is poised for a cyclical boost, supported by rising consumption, a strengthening rural economy and increased private sector capex, providing strong macro tailwinds. Additionally, if global tariff-related uncertainties subside, it could further stabilise and support the markets.
Is it a good time to invest or a further fall will provide better entry points?
Investors should consider slowly adding from hereon, particularly in areas where valuation comfort exists, and the growth outlook remains strong. Equity investing often rewards a contrarian approach — opportunities arise when the crowd is fearful. Market corrections can create attractive entry points, allowing long-term investors to capitalise on mis-priced assets.
What positives do you see in the consumption and banking space after the Budget?
The Budget was well-balanced, with tax relief measures being expected to boost consumption. Increased social spending by states and the implementation of the Eighth Pay Commission will further support the consumption growth. RBIs liquidity-easing efforts will help the banking sector. In FY26, we expect a pick-up in deposit as well as credit growth.
What changes with the addition of newer sector stocks in the Nifty 50?
We cannot comment on specific stocks. However, over the years, we have seen a higher addition of structural long-term growth stocks in the Nifty50.
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