Something fundamental has changed in the taxation structure, with interest rates and global outlook. So one needs to wait and see how things play out, says Udayan Mukherjee.
It is tempting to say that fall in market should be bought immediately but as of now it would be good if one could wait and watch a bit because unlike the last 12-14 months when people bought into falls it worked out well for them. Now things have changed a bit in bond markets, in the global space and in the Budget, says Udayan Mukherjee of CNBC-TV18.
One needs to wait a bit and if one wants to buy, then buy only quality stocks because generally there is lot of skepticism around midcaps and smallcaps.
However, this does not mean that there is a major trend change for the market but there could be phase of 3-4 months where the market struggles, says Mukherjee, adding that one will get lot of opportunities to buy stocks, so don’t be in a hurry to buy now.
The key concern, as we wade to the next 2-3 months is for the portfolio of investors who largely own midcaps and smallcaps, says Mukherjee.
For a whole host of midcaps and smallcaps we will see a major valuation compression but that may not happen in the largecap universe because FIIs may still continue to buy them on declines. It is the PE compression in the midcaps that one needs to be cognizant about, he says.
Moreover, with the long-term capital gain tax coming in the mood has spoilt and when domestic sentiment is hurt then there is a genuine chance of Indian market underperforming other global markets, which we already have been doing but it might get starker, says Mukherjee.
He says, this time something bigger is happening both globally and locally and one must be aware of that. Something fundamental has changed in the taxation structure, with interest rates and global outlook. So one needs to wait and see how things play out.For full discussion, watch video