Nifty's Next Bull Run Dependent On FIIs' Investments, Says Nilesh Shah

Nifty 50 is well-positioned to outperform and will soon get back to being a massive wealth creator, said Nilesh Shah, Founder, Envision Capital.

However, he said that, for Nifty to outperform, the "foreign investors need to stop selling and return to investing in the market." But this will be put into effect when domestic investors continue to invest in the market, Shah said, noting that domestic investors are already pumping money, and as long as "Nifty holds", they are going to continue their allocation.

Notably, on September 5, domestic institutional investors were net buyers in the Indian equity market, with a net value of Rs 1,821.23 crore. In contrast, foreign institutional investors were net sellers, recording a net 'sell' value of Rs 1,304.91 crore.

Shah further explained that investment in Nifty is driven by global investors who have now turned wary due to a "slowdown in Nifty earnings and GDP in the past one year". However, Shah believes that the new developments, including the "GST rationalisation and improving geo-economic picture with India-China and India-US ties," will give Nifty its edge back.

"Clearly, the GST rationalisation is one of the biggest moves on the economy side in probably many months or even many years, and I still believe that we are underestimating its impact," Shah said.

India has always been a consumption-driven economy with 60-65% of GDP coming from consumption, so an effective 5% reduction in the tax rate is huge, he added.

The next one or two months only mean lots of change and transition for companies, which could pose some challenges in terms of existing inventory, but the impact over the next quarter will soon be very clearly visible, he added.