Better return to keep capital market on a growth track

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Mumbai: Kotak Mahindra AMC Group President and Managing Director Nilesh Shah said the Indian stock market will continue to rise higher on the back of improved corporate profitability in the long term despite current hiccups from the second wave of the COVID19 pandemic.

Speaking at a webinar organized by the Association of National Exchange Members of India (ANMI) on the Equity Market Outlook, Shah said the stock market is counting on the trend in corporate profitability, which improved from a low of Rs 32,000 crore in June quarter last year to an expected Rs 2,10,000 crore  in the quarter ended March 2021.

“The stock market is ignoring short-term pain of COVID19 and looking at long-term corporate profitability,” Shah said. “In the June 2021 quarter, corporate profitability will come down, but the market is expecting it to rise after that. Corporate profitability is sustainable.”  He added factors such as the government’s vaccination and healthcare improvement drives; lower interest rates and cost control; and fiscal stimulus to support livelihoods, will support this upward trend in the next six months 

Besides, he expects India’s long term fundamentals to remain strong as the country has managed to stay on the path of a moderate inflation regime, stabilized fiscal deficit, forex surplus, improved banking scenarios, and availability of physical and digital infrastructure. He picked the home improvement and real estate, industrial, and digitalization sectors as outperformers in the long run.

ANMI Alternate President Kamlesh Shah said the country was in a very crucial stage where on one hand it is are fighting COVID19 while on other hand the stock market is at its new peak.

“We are delighted by never before like participation of retail investor,” Kamlesh Shah said. “This reminds me of theory of Hope Vs. Fear. Last year, we were engulfed with fear of COVID and markets slid to a low, but today we have hope in the form of vaccination and pickup in economy. So eventually we have victory of hope over fear.”

The lecture was part of the ‘Knowledge Series’ to celebrate ANMI’s Silver Jubilee year. ANMI started Knowledge Series as an initiative to educate consumers about various industries.

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