Higher probability of 5-7% correction in market than chance of a 10% upside: Ashish P Somaiya

Higher probability of 5-7% correction in market than chance of a 10% upside

The record high levels being charted by the Indian equity markets are incrementally making domestic fund houses cautious, if not jittery. Ashish P Somaiya, Chief Executive Officer (CEO) of White Oak Capital Management, expects a higher chance of a correction than a rally in the Indian equity markets by the end of the year.

In an interview with Moneycontrol, Somaiya said he sees a higher probability of a 5-7 percent correction in the markets than a 10 percent upside, given that the rally has been too sharp and fast. He also feels that the concentration of fund inflows towards small- and mid-cap stocks, as well as overexposure to select sectoral and thematic funds, is the reason for this caution.

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He suggests that new investors, who have missed the rally thus far, should be careful about entering the markets now since net inflows in the mutual fund industry remain muted and some investors are also taking cash off the table at these higher levels.

Though the market veteran agrees that this bull run is structural in nature and has the potential to continue for 18 to 24 months, he expects investors to delay their investment decisions in the run-up to the general election—an important event that is around the corner in the next calendar year.

Somaiya also sees huge potential for financials, non-lending financials, and pharma themes. He also has a significant preponderance of some mid-cap IT stocks and remains overweight on industrials and consumer discretionary sectors, among others.