Why Shankar Sharma is not buying ICICI Bank, Kotak Mahindra Bank shares despite recent correction

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October 8, 2018 4:51 PM

Even as we continue to see a slide in stock markets, ace small-cap investor Shankar Sharma says that it’s a good time to build portfolio over the next 3-4 months, with a 4-5 year horizon.

Shankar Sharma says that the next few months will provide amazing opportunities for investors.

Even as we continue to see a slide in stock markets, ace small-cap investor Shankar Sharma of First Global says that it’s a good time to build portfolio over the next 3-4 months, with a 4-5 year horizon. However, he’s not interested in names such as ICICI Bank, Kotak Mahindra or even IndusInd Bank. Explaining the rationale behind such an outlook, Sharma said that he is focussing primarily on small caps, and none of these companies appear to be too bad right now.

“None of the companies are telling me that look the situation is very bad for us. As long as that logic holds, I continue to be very relaxed and I always say that you need a serious bear market to make serious wealth. It is very, very simple,” Shankar Sharma told in an interview to ET Now. Notably, shares of ICICI Bank, Kotak Mahindra and IndusInd Bank have lost a staggering 17%, 28% and 26% from their 52-week highs in the recent correction.

Shankar Sharma says that the next few months will provide amazing opportunities for investors. However, it will need a lot of courage to enter the stock market, during such a phase. According to the top investor, it is much more difficult to identify a bear market, as compared to a bull market. “The trick is in picking bear markets because stocks have infinite room on the upside. They keep going on and on and on and we have seen that in 2000 when I used to think that Infosys at 60 P/E was expensive because in India we had never seen 60 P/E ever before,” he told another interview to CNBC TV18.

While a few emerging market currencies have performed worse than domestic currency rupee, Sharma noted that it will be a disaster if rupee breaches the 75-mark against US Dollar. “The Nepali currency has fallen more than India, Ravanda, the currency of Botswana has also fallen. Do we want to count ourselves in the company of these kinds of markets? There is a list of some 20 countries which have done worse than India. If we start talking of India in the same breath as Turkey and Indonesia or Argentina, then I think we have a serious problem,” he told the channel.

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