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  1. Stock market correction to hit bad quality stocks, says Nilesh Shah of Kotak Mutual Fund

Stock market correction to hit bad quality stocks, says Nilesh Shah of Kotak Mutual Fund

After the stock market correction continued for the second consecutive trading session, after the Union Budget presentation on February 1st, Nilesh Shah of Kotak Mutual Fund says that non-quality stocks are slated to correct more steeply.

By: | Published: February 5, 2018 4:32 PM
Nilesh Shah of Kotak Mutual Fund says, “This time the correction will be more in kachra, non-quality stocks.” (Image: Reuters)

After the stock market correction continued for the second consecutive trading session, after the Union Budget presentation on February 1st, Nilesh Shah of Kotak Mutual Fund says that non-quality stocks are slated to correct more steeply. “This time the correction will be more in kachra, non-quality stocks. The large caps and quality mid caps, while they can correct, provide a great opportunity to enter,” Nilesh Shah of Kotak Mutual Fund told in an interview to ET Now.

A few managers say that investors may look to invest in midcap stocks, following this correction. “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. We continue to believe that midcap will be able to outperform large cap in the long run,” Alok Singh, CIO, BOI-AXA Investment Managers told FE Online.

According to Nilesh Shah, the volatility in the market is due to a combination of factors. “The volatility has arisen due to various reasons, one was the fiscal slippage and the excess borrowing program. The second has been from the RBI, for comforting the market. The third is the global interest rates, which are rising,” Nilesh Shah said in the same interview.

Arun Jaitley fixed the fiscal deficit target at 3.3% in FY19. The government’s fiscal deficit target for the fiscal year 2018-2019 at 3.3% is higher than previous year’s 3.2% target on account of shortfall in non-tax revenue due to deferment of spectrum auction, Finance Minister Arun Jaitley said. Interestingly Finance Secretary Hasmukh Adhia, says that the stock market correction is not because of the introduction of LTCG tax. “Markets are down, because global markets have gone down,” Hasmukh Adhia said, adding that its unfortunate that the move came when the global markets are in turmoil.

On similar lines, Amitabh Jhunjhunwala of Reliance Capital said, “Friday’s US equities and bonds sell-off is likely to pull global markets down in the coming week. It’s a wider correction, nothing to do with LTCG tax or Union Budget in India.”

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