As stock markets remained volatile in previous year, the investors currently are a bit sceptical on how 2019 would fare especially considering the upcoming union budget and general elections. Even though it’s hard to foretell exact target for the domestic bourses going ahead, the year is expected to offer positive returns, says Nithin Kamath. The markets are mainly looking for a stable government more than anything else and the investors are advised to park their money systematically into diversified equity mutual funds, Nithin Kamath, Founder & CEO, Zerodha tells Ashish Pandey of FE Online.
Sharing his expectations from the upcoming budget, Nithin Kamath tells FE Online that it’s time for security transaction tax (STT) to be scrapped as it would enhance liquidity in the stock market.
Here are the edited excerpts from the interview:
Where do you see Sensex, Nifty from now? What are the major factors that may impact stock markets going ahead?
Just like timing the market, it is quite hard to put a number and set that as a target for Sensex or Nifty. However, I’m optimistic and I see the markets giving a positive return in 2019. On a shorter term basis, the central budget will drive the markets, but I think the big draw is the Lok Sabha elections. The market is looking for a stable government, irrespective of the party in power.
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What’s your advice for retail investors?
These are interesting times to accumulate and build an equity portfolio either directly or via Mutual Funds. If you are building an equity portfolio, stick to a non-leveraged business whose balance sheets are strong and growing. Ensure your portfolio companies have a double-digit margin and a healthy ROE. If you do not have the time to select such companies, then simply start systematically investing in any diversified equity mutual fund from any of the reputed asset management company.
Does ‘technology-driven zero brokerage’ model have enough steam left to sustain itself in the long run?
Certainly. Zero – brokerage is just one aspect of the entire ecosystem. Technology enables us to build products which cater to various segments of market participants. The tech-driven ecosystem is a recent phenomenon and will shape the future of broking in India.
When do you see the NBFC sector recovering?
The recent turmoil in the sector has caused a lot of liquidity concerns with short-term lending rates going up by at least 200-300 basis points. In my view, there will be regulatory changes, leading to even smaller NBFcs reporting their asset – liability position. I think the sector will be under pressure for at least another 6-8 months with NBFC with a stronger balance sheet recovering faster.
What are your expectations from the upcoming general budget? What are your expectations as a CEO of an online trading house?
Keeping the central elections in perspective, I think the general budget will be skewed towards a populist budget with no real big bang reforms. As usual, this time to I’d hope for the ‘Security transaction tax’ (STT) to go away, which will help create better liquidity in the market, making it more vibrant.