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Indian market is trading at a gold valuation, says Nilesh Shah of Kotak AMC

Long-term investors can use this correction as an opportunity to build portfolio albeit with a longer term horizon, Shah said.

September 29, 2022 / 04:48 PM IST

Indian markets are trading at a gold valuation and are growing at a significant pace, said Nilesh Shah, managing director at Kotak Mahindra Asset Management Company.

"India moved from the tenth-largest economy to fifth-largest economy in last eight years. It will become third-largest (economy) in next eight years," he told CNBC TV18 in an interview.

"So (India's) growth story is visible and valuation, well, it's trading at a gold valuation," he added.

Talking about India's outperformance in the equity markets, Shah said that Indian market could mirror the downfall in global markets but will emerge as an 'oasis in the desert'.

The veteran asset manager also suggested investors should buy stocks 'on dips' and use the current market correction as an opportunity to build their portfolio.

"So the best thing for investors will be to buy (stocks) on dips," he said. "So be a long-term investor, use this correction as an opportunity to build your portfolio albeit with a longer term horizon".

Shah, however, also acknowledged that global as well as Indian markets are bound to stay volatile in the near term.

"We are at a stage where there will be volatility in the market in both the direction up as well as down," he said.

Shah also talked about the Bank of England's move to buy government debt in order to restore UK's financial stability and believes that central bankers should go back to providing liquidity and cutting interest rates to bring down elevated inflation.

"We will require central bankers to go back to providing liquidity, cutting interest rates and supporting growth," he mentioned.

The BoE on Wednesday announced it would buy as many long-dated government bonds as needed until 14 October to stabilise financial markets, after a slump in British gilt prices.

Citing potential risks to UK financial stability, the BoE also said it would delay the start of a program to sell down its 838 billion pounds ($891 billion) of government bond holdings, which had been due to begin next week.

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first published: Sep 29, 2022 04:09 pm