Veteran investor Madhusudan Kela has cautioned against extrapolating the strong returns in stock market seen over the last three to four years, emphasising that the current market environment will require bottom-up stock picking.
"I expect that we will get a lot of opportunity to buy stocks and because of market volatility, you could get very good entry points," Kela told NDTV Profit in a televised interview on Monday.
The benchmark Nifty 50 has corrected by 11% since the September-end peak, due to a confluence of factors, including Donald Trump's trade policy, weak Indian corporate earnings, and slowing economic growth.
Kela, known for focusing on risk-reward analysis, sees more value in large-cap stocks in the Nifty pack, which is currently trading at 18 times its projected one-year forward earnings and in line with long-term averages.
"My tilt is clearly more towards large caps this year. I expect bottom up stock picking in consumption stocks, like a lot of regional brands in consumer staples are propping up," he said, noting that regional brands are gaining market share at the expense of major players.
Regarding public sector undertakings, Kela recalled his call on PSU stocks three years ago, driven by their attractive valuations. While some PSU banks still offer value, he advised moderating return expectations.
"Preserve the money you've made over last three to four years and be picky with stocks. Market volatility will give chances to enter stocks," he said.
Watch Madhusudan Kela's Interview Here:
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