Even as the domestic stock markets seemed to be get back the momentum gained after a brief pause witnessed in the last one month, Nilesh Shah of Kotak Mahindra AMC says that he expects the stock markets to be more volatile in 2018, and accordingly investors should expect moderated returns from the stock markets. In an interview to ET Now, Nilesh Shah said that the stock markets will discount based on political expectations. On similar lines, ace investor Porinju Veliyath said in an interview to CNBC TV18, that investors should trim their return expectations downwards.
“We can’t see 20-30-40 percent rally every year,” Porinju Veliyath told the channel. According to Porinju, the NIfty had rallied by nearly 29 percent in 2017 and investors made average 30-40 percent returns while smart investors made 80-90 percent returns. However in 2018, the ace investor says that return expectations will be a bit lesser. After the recent stock market correction, top mutual fund managers and ace investors alike say that the valuations discomfort seems to have subsided. “With the recent correction the overall valuations in the market have become quite reasonable. Also, the Q3 result season so far has been quite encouraging which further makes the market more reasonable,” Alok Singh of BOI AXA mutual fund told FE Online.
So where should the investors look for opportunities? Nilesh Shah says that the markets are likely to remain range-bound in the near term. “Investors can make money by picking the right stocks,” Nilesh Shah told ET Now. “Smart investors can create wealth by using midcap and smallcap theme for another 2-3 years. The second theme is corporate governance,” Porinju Veliyath said.
Ace investor Porinju Veliyath is upbeat about the changing landscape of corporate governance theme in India. Giving an example of how to play the corporate governance theme, Porinju Veliyath observes the rally in shares of Fortis Healthcare after promoters Malvinder and Shivinder Singh resigned. The ace investor noted that the Supreme Court allowed to sell pledged shares is the best example of corporate governance.