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New Delhi: Nilesh Shah, managing director of Kotak Mahindra AMC, spoke to Money9 about the current market scenario and investor confusion. He said that on the one hand the country's macro indicators are looking strong. On the other hand, the stock market is unstable and volatile. Despite this, new IPOs are witnessing strong investment, which makes investors confused whether to invest money in the market, do SIP or wait. Let's find out what advice he has given to investors.
On valuation concerns, Nilesh Shah said, “Price is what you pay, 'price' is what you get.” He cited the example of social media comments on the expensive valuations of Zomato and Lenskart, saying that as a fund manager, it is important to trust your research rather than pay attention to what people say. He explained through a story that it is impossible to make everyone happy. He said that the performance of any fund manager should be assessed by the returns of his portfolio.
Shah described a 3-step process for investing in an IPO or an existing company. First, the quality of the business (Return on Capital Employed and the possibility of growth), second is the vision of management, execution and governance and the third is the valuation. He said that valuation is not a definite math (like P/E of 10 is cheap and P/E of 20 is expensive), but it is an art where decisions have to be made. Investors should increase their investment as per their confidence.
Shah advised investors not to stop their investments despite the current confusion of the market. He said that you should continue to invest more or less as per your choice, but one should expect low or moderate returns from the market for the next two years.
Regarding sector-wise investments, Nilesh Shah said that initial investors should start with diversified funds, whereas experienced investors should keep the majority of their core portfolio in diversified equity funds. He advised to have a satellite portfolio in thematic or sectoral funds. At present, he has described banking, financial services and consumer sectors as themes with good growth prospects. However, he warned that only a limited amount of investment should be made in these funds because not all sectors perform well together.
(Disclaimer: This article is only meant to provide information. TV9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, gold, silver and crypto assets.)
