Have the markets bottomed out? Nilesh Shah, managing director at Kotak Mahindra Asset Management Company says its a fair value market, stocks are close to historical averages but selling may continue till FIIs resume buying. He sees Nifty earnings between Rs 1,150 -1,200 per share in FY26 and says India can be a beneficiary of global growth if we play our cards well.
Here is an excerpt of an exclusive conversation with FinancialExpress.com –
Do you think the Indian markets have bottomed out at the current level?
Over the short-term, the market is like a voting machine, the vote comes, the money flow comes. But over the long-term, the market is like a weighing machine, the fundamentals begin to matter. As you can see, at the moment, flow-wise FPIs are on the selling side. They are not hiding their bias, they are selling. Once you know someone is selling, why will you give them an easy exit. You will buy but at lower prices.
Therefore, at least in the near-term, it might be fair to say as long as FPIs continue to sell, the prices will continue to go down. Whenever their selling stops, the markets will bottom up. When they resume buying, markets will start moving up.
Is the correction in the mid and small caps done or do you anticipate more pain in that segment?
You have to understand that within the small and midcap segment, there are momentum stocks and there are quality stocks. Momentum stocks have seen a substantial fall. However, there is more pain left in these momentum small, mid, micro mini caps.
In comparison, the quality small and mid caps, we believe, are bottoming out. When I say bottoming out please remember that if FPIs are continuously selling, prices will go down. But from a valuation point of view, at least the quality large mid and smallcaps are now around their historical averages.
It’s a fair value market. It has not become a cheap market like March 2020 Covid-19. We are around our historical averages in most of the large mid and small caps.
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