Midcap and smallcap stocks could crack more if stock market declines, says Avendus Capital’s Andrew Holland

By: |
Published: January 9, 2018 3:32:14 PM

Andrew Holland says that in case of a stock market correction, midcap and smallcap stocks will see a sharper decline.

“We will see earnings growth ahead. We are projecting it to be 15 percent this year,” Andrew Holland of Avendus Capital said. (Image: Reuters)

As India Inc enters into another earnings season, Andrew Holland of Avendus Capital expects the corporates to report another healthy set of earnings. “We will see earnings growth ahead. We are projecting it to be 15 percent this year. This should keep the market propelled in higher zones this year,” Andrew Holland, CEO, Avendus Capital Alternate Strategies told CNBC-TV18 in an interview. The expert said that the valuations don’t look as compelling as they were two years ago.

Further, Andrew Holland added that its a liquidity driven market now. He also said that a correction could be in the offing, in which case he expects around 10 percent fall. Further, he said that in case of a stock market decline, midcap and smallcap shares will see a sharper decline. Andrew holland said that he is cautious, as the street is ignoring negative news flows and finding reasons to move higher.

Top market voices and industry captains alike are cautioning investors about the stretched valuations in the stock markets. In a letter to employees of Kotak Group last week, top banker Uday Kotak raised concerns over investor exuberance in the capital markets. “With stocks reaching new highs every day, the current bull run of the capital market looks extremely tempting. I would advise investors to exercise caution as stock prices are moving up.” Uday Kotak said.

With the earnings season and the Union Budget just round the corner, the equity markets are likely to remain volatile through 2018, Tushar Pradhan of HSBC Global AMC said. “I think what will happen of course is that there is going to be some volatility; I believe that is because of all the news flow which is so now I would think jammed up in the first half of the year. So you have got a Budget coming up, everything to be curious about what the slippage is all about, you have got a lot of elections coming through the entire year as such that will always lend some volatility,” the expert told CNBC TV18 recently.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.