Uday Kotak says glad that stock market corrected; had warned about bubble in few shares

By: |
Published: February 22, 2018 10:40:54 AM

After the domestic stock market correction witnessed in the last one month, even as the 30-share Sensex has shed more than 5% in the last one-month alone; ace banker Uday Kotak said that he’s glad about the development from the point of view of longer term system.

Uday Kotak had warned investors against getting lured by stocks hitting all-time highs in quick succession.“I’m glad that the markets have corrected since then (January), because we were seeing first time investor monies going into a very few stocks which could be easily manipulated as well,” Uday Kotak said. (Image: Reuters)

After the domestic stock market correction witnessed in the last one month, even as the 30-share Sensex has shed more than 5% in the last one-month alone; ace banker Uday Kotak said that he’s glad about the  development from the point of view of longer term system. “I had spoken about the possibility of a bubble in few stocks, the small and midcap. I’m glad that the markets have corrected since then, because we were seeing first time investor monies going into a very few stocks which could be easily manipulated as well,” Uday Kotak told CNBC TV18.

The top industrialist pointed out that the markets are in the process of correction, and fundamentally the equilibrium is still a little away. “I think we have seen an 8-10% correction in the largecaps and probably a 20-30% correction in the small and midcaps,” Kotak observed adding that a single digit correction from the current levels in the largecap will make the markets healthy. However, Uday Kotak is of the view that beyond fundamentals, technicals can move the  stock markets on either side, even as fundamentals don’t remain static. Hence, its imperative to move the fundamental value  taking these changes into account, explained Uday Kotak.

In January this year, the top banker, in a letter written to employees of the Kotak Group, raised concerns over investor exuberance in the domestic capital markets. Uday Kotak had was concerned about stocks hitting life-highs in quick succession, and advised investors against getting lured into them. In the same letter, Kotak had also pointed out that investors were shifting money from debt to equity, and perceiving it to be less risky.

Uday Kotak had also raised similar concerns with regard to midcap and small caps stocks, speaking to Bloomberg Television on the sidelines of the World Economic Forum held last year. Comparing the organised savings chasing just a few stocks to a funnel, Uday Kotak had said that he would be cautious on the small and mid-cap sectors within the Indian equity market, which have the risk of getting a bit bubbly.

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.

FinancialExpress_1x1_Imp_Desktop