The mid-cap and small-cap valuations are attractive but having said that it may take multiple months before they start performing.
Market likes growth and midcap/smallcap stocks are not giving that, as of now, but having said that, please remember that in many cases 3-5 year returns in midcap/ small-cap stocks are made in a couple of months, Satish Kumar, Head of Equities, Equirus Securities, said in an interview with Moneycontrol’s Kshitij Anand.
Q) What is driving the market currently given the domestic and global cues?
A) The rally is not driven by the broader market which is still languishing. It’s the select few stocks that are driving the market rally.
It is not economic recovery which is fueling the markets rather the risk aversion and investing in names that are showing any semblance of growth.
It’s hard for me to believe that China has not learned lessons from SARS, so while investors are edgy and so are central banks. So, any alleviation in the situation will take the market even higher driven by the fresh flow of liquidity by central banksQ) Do you think the Budget 2020 had enough firepower to push the economy back towards 6% in FY21?
A) Budget 2020 has been given undue importance. In the last 6 years, the budget has always been a disappointment to the investor community.
Indian aggregate demand is exclusive of budget and is driven by demographics. India will achieve 6 percent growth irrespective of budget.Q) Coronavirus concerns are mounting and if the situation escalates further do you think it will have a long-lasting impact on the Indian economy and impact earnings of India Inc.?
A) As explained earlier Coronavirus is not even near to SARS, which closed entire SE Asia. I don’t see it having any significant negative impact on the Indian economy.Q) Mutual fund investors are showing their confidence. Even small & midcap schemes have attracted a large sum of money. Do you think the lull in small & midcaps is over?
A) The mid-cap and small-cap valuations are attractive but having said that it may take multiple months before they start performing.The market likes growth and midcap/small-cap stocks are not giving that, as of now. Having said that, please remember that in many cases 3-5 year returns in midcap/ small-cap stocks are made in a couple of months.
So, investors should stay invested. These investments need “temperament” more than anything else.Q) What is your take on December quarter earnings? Are there any green shoots?
A) None as of now. The usual companies did well, and others languished. Recovery in PMI etc normally takes a quarter or two in showing in earnings. So, no surprises for us in that regard.Q) What is your take on LIC going public? Challenges and opportunities?
A) While it presents a good opportunity for the government to fulfill the divestment targets, it is not an easy thing to do. Labour unions have always opposed it and it will once again start agitation against it.Q) Valentine’s Day just went by – when did your love with capital markets begin?
A) Love for capital markets is because of its fickle nature, you can never understand it, and it keeps you surprised. It’s not for someone who needs predictability. That’s what intrigued me some 18 years back when I was in the final year at IIM Calcutta.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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