Even as we see a recovery in the small cap space with the BSE Smallcap Index extending gains on Wednesday morning, after soaring by more than 350 points on Tuesday, stock market expert Nilesh Shah says that select small and mid cap stocks are showing signs of a rebound. “There are many quality small and midcap stocks where governance is not debatable, the balance sheet is reliable, the management is solid and clearly those stocks had fallen in line with the momentum stocks have started showing not only receding selling interest but also some amount of buying,” Nilesh Shah, MD, Kotak AMC told in an interview to ET Now.
In the interview, Nilesh Shah said that a few small and micro caps, where governance is doubtful, balance sheet numbers are debatable auditors come and go and the institutional participation is very limited, the bottom has yet to be hit, as valuations take into account suggest a more rosy future than justified.
So where exactly should the investors look at in the current scenario? “As of today, our model suggests around 35% to 40% allocation to equity and within that majority to largecaps. As per our model, the smallcaps and midcaps have not become so attractive that we put money from balanced advantage fund into it,” Nilesh Shah said, adding that the new balanced fund is a very conservative fund which aims to reduce volatility.
Sharing that the Kotak Balanced Advantage Fund is a good avenue for all investors, Nilesh Shah said that the fund is suitable for SIP as well as lump sum investments. “This is an evergreen fund. It is suitable for all kinds of investors. If you want to do lumpsum investment, this is appropriate. You want to do SIP, this is appropriate. You want to invest for the first time in mutual funds, this is appropriate. You want someone who times the market, this is appropriate. Anyone other than one who holds less than one cycle of the market from bull to bull market or bear to bear market, will find this fund appropriate,” he told the channel.