Jul 14, 2017 07:27 PM IST | Source: CNBC-TV18

Correction overdue for market; people waiting on the sidelines: Motilal Oswal AMC

There is a correction which is overdue for this market and the sooner it comes the healthier it would be for the market, said Manish Sonthalia, Head Equities-PMS, Motilal Oswal AMC.

The Indian equity market although had a tepid closing on the last working day of the week, the market made new all-time highs in the week. Nifty touched 9900 levels but closed below that for the week. The Sensex closed above 32000.

Both the indices gained over two percent, the Bank Nifty too gained over two percent. However, the midcaps and smallcaps underperformed which experts believe was a healthy for the market.

To know the way forward for the market and the investment strategies that would benefit investors, CNBC-TV18 spoke to two market experts Manish Sonthalia, Head Equities-PMS, and Aashish Somaiyaa, MD & CEO from Motilal Oswal AMC.

Sonthalia said there is a correction which is overdue for this market and the sooner it comes the healthier it would be for the market.

Somaiyaa too agrees and says people have been waiting too long for a correction and are getting nervous. There is still lot of money waiting on the sidelines to come into the market, he added.

Overall, there has been a shift from physical savings into financial savings across all asset classes and equities being a part of financials has benefited from this movement, said Sonthalia.

According to him, there is a definite froth in the midcap and smallcap space but there is still money to be made in the long-term.

Somaiyaa said the SIPs are currently at record highs with around Rs 14000-15000 crore coming into equity mutual funds through systematic investment plans.

When asked about the some of the sectors like pharma which were rallying, Sonthalia said the house is bullish on the space and believe the sector is close to the bottom now. They like Sun Pharma from that space, he said.

However, for IT, growth is still a challenge with regards to their business models, said Somaiyaa.

Sonthalia said they are basically growth investors - growth at reasonable prices and not contrarian or deep-value investors. “Whatever stocks we have in the portfolio, we think growth is yet to come, which is not yet been priced.”

Talking about risks for the market Somaiyaa said the one of the risk is that liquidity inflows are thick and fast and if market corrects or shocks, investors will have a bad experience. So post that would these investors panic – that is the worry. So it would be good if market consolidated a bit.

Other risk is of continued disappoints be it from China and commodity market, asset quality review, demonetisation etc. So, the only hope is that there are no more accidents and investors have a good experience for some time.

Sonthalia also shared on their rationale of being positive on oil marketing companies.

For the full discussion, watch video
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