As Sensex, Nifty see correction, Nilesh Shah tells why it’s time to look beyond large caps

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Published: July 16, 2019 1:58:10 PM

Even as large caps led the recent stock market rally, investors must now look beyond them as their valuation is highly expensive, said a veteran market analyst.

The investment should be made into select stocks from broader markets that are currently looking cheap post recent correction in the equity markets, Nilesh Shah, MD, Kotak AMC said.

Even as large caps led the recent stock market rally, investors must now look beyond them as their valuation is highly expensive, said a veteran market analyst. The investment should be made into select stocks from broader markets that are currently looking cheap post recent correction in the equity markets, Nilesh Shah, MD, Kotak AMC told CNBC-TV18. The small  and midcaps have higher chance of rebounding as against the large caps, he said. Even a few days back, Nilesh Shah had told ET Now that large caps hold lesser probability now to bounce back when compared with small and mid caps. From the last budget largecaps are up 10 per cent, while midcaps are down nearly 18 per cent and small caps are down about 28 per cent.

The investors must also track the transmission of lower rates and funds into the credit cycle, he added. Since the Reserve Bank of India (RBI) is cutting rates, pumping liquidity, the environment may get more conducive for the small and mid caps if the government transfers capital reserves of RBI to PSU banks.

“Monsoon has been progressing well in July though it was not so good in June. If monsoon rains are as good in the rest of July and August, like it is in the first half of July, then we will see agriculture recovery. So if oil and monsoon support the Indian economy and the steps taken by the government start getting fructifying, then I will see the second half in a far better shape compared to the first half,” he said on monsoons.

Meanwhile, after opening higher the benchmark headline indices — Sensex and Nifty — extended gains in the afternoon trade on Tuesday. The Sensex is up 135 points to 39,034.57 while the Nifty is trading above the 11,600 mark.

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