Markets are a 'Triveni Sangam' of fundamentals, flows and sentiment: Nilesh Shah

Nilesh Shah

The markets today, just like the past cycles, are driven by three things: fundamentals, flows and sentiments, said Nilesh Shah of Kotak AMC in an interview with Moneycontrol on July 31.

Shah believes that the limited number of investment options for foreign investors in the Chinese, Russian, South African or Turkish markets is what is directing flows towards India. This increased inflow of funds is further fuelled by the China Plus One sentiment that has been prevalent in the markets recently.

These flows and sentiments are backed by strong fundamentals which have improved over the years. The Indian economy has displayed robust growth over the past 6 months with the Nifty delivering an 11.54 percent return owing to Shah’s 'Triveni Sangam' principle.

Citing the historic movements, Shah stated that “like in the past, if we don't deliver, this momentum can't continue. But there is hope this time that we will deliver”. He believes that government intervention accompanying the private sector is making corporate India global and displaying visible growth.

Shah noted that the prices of stocks are rising because there are more aggressive buyers than sellers in the market, be it from the foreign or domestic investments front. These investors are buying as they are bullish on India. 

The market expert sees volatility in the markets in the short term, especially with the elections and fed rate hikes brining potential surprises which the markets have merely discounted for, as positive. While there is uncertainty and a possibility for a correction in the short term, Shah is optimistic in the long term perspective. “Between these two extremes, short-term uncertain, long-term fairly certain, medium-term will probably swing between fear as well as hope. My bet will be short-term, keep some dry powder for correction, medium to long-term stay invested for a participation in India growth story” said Shah.