Temper return expectations, choose quality over momentum, says Nilesh Shah of Kotak AMC

For investors who can take some correction in their stride, there is no need to worry as the India growth story continues, said Nilesh Shah of Kotak AMC.

Kotak AMC's Nilesh Shah is calling on investors to temper down expectations of return from market and look to stay with quality stocks over momentum, while encouraging to take some correction in the stride.

His comments assume significance as the benchmark index Nifty 50 hit the 25,100 level for the first time ever, on intra-day basis. For the year so far, Nifty 50 has risen by over 15 percent.

"For traders, lots to worry about, but for investors who can take some correction in their stride, there is no need to worry as the India growth story continues to march on, albeit one will have to moderate the return expectations," Nilesh Shah said in a conversation with CNBC-TV18.

Nilesh Shah shared three key mantra for investing in these times - starting with moderation of return expectation, choosing quality above all else, and not overpaying for value. "Investors believe 20, 30, 40 percent return is their birth right and I doubt market will be able to deliver that. Moderate expectations, go for quality over momentum stocks, high-floating stocks at market-discovered prices rather than concentrate holding in low floats. And, go for reasonable valuation over what is expensive," Nilesh Shah summarised his thesis with markets are record highs and valuation is select pockets seeming over-stretched.

The disappointment of below-expectation returns in the stock market can be a factor at play that he says may trigger some pullback, said Nilesh. "In the past, we were getting hammered for delivering negative returns, my fear this time is that we will get hammered because we delivered below expectation returns."

Nilesh Shah believes there could be many reasons for a correction to set in, ranging from US economy to the situation in Bangladesh, or may be unwinding of carry trade in Yen, or even Yuan. However, based on the fundamentals behind India's economy, corrections are unlikely to be deeper, Nilesh said. The pullback if any can be a combination of time and price-wise correction, and those can be a great opportunity to invest, he added.

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