Markets Face Short-Term Headwinds, Says Ace Lansdowne's Vikram Kotak
Kotak noted volatility may be a factor in markets around state elections and the general elections next year.
Indian stock markets face short-term headwinds due to impact of poor monsoon and trade pressure due to wars, but the macro side fundamentals remain strong, according to Ace Lansdowne Investments' Vikram Kotak.
The monsoon this year has been "upsetting" leading to rural stress, while the supply chain disruption due to two wars (Ukraine and Israel-Hamas) have added to pain on the trade front, Kotak, the co-founder and managing director of the Mumbai-based investment firm, told BQ Prime.
However, given the positive headlines in recent macro data like GDP growth, GST collections, power consumption, automobile sales and railway freight and airline traffic, this is a "magic moment" for India in the long-term, he said.
Volatility may be a factor in markets around state elections and the general elections next year, but valuations are in a good range, Kotak said.
Pockets Of Opportunities
"Markets are punishing people who are out of flavour," Kotak said in reference to stock prices. He held a favourable view towards electronic manufacturing services and private banks.
"EMS is a great story. We are still at a mobile phone journey and now we have to go the whole way. Its a great opportunity in the next five-seven years," the veteran investor said.
In terms of banks, he said risks lie in elevated interest rates and the rush in a crowded deposit market.
"Government and banks want to raise money, capex cycle is on, and global yields and rate set-up is not so easy. NIMs (net interest margins) cannot go up from here and may even contract. That can cause a short-term problem," he said.
Kotak is upbeat about asset management companies with rising interest among Indians to invest through mutual funds.
Watch the full interview here:
