Nilesh Shah, managing director of Kotak Mahindra Asset Management, cautioned investors at the NDTV Profit Town Hall against expecting outsized returns from Indian equities in the current environment, even as he made the case for staying invested.
Asked why markets should deliver returns at all given two years of largely flat performance, elevated crude prices, and valuations that have cooled but remain far from cheap, Shah was direct about calibrating expectations. "If you are looking for 30% return, this is not the market where you should invest," he said. "A stock can deliver, but not the market." Investors comfortable with high single-digit to low double-digit returns, he said, would find this market "good enough to invest."
Shah acknowledged that Indian markets are currently trading at fair value — neither cheap nor expensive — and that a meaningful re-rating may depend on global money rotating out of AI-linked trades elsewhere, something India has limited exposure to. "India doesn't have AI play as much as other countries have, and hence we'll have to wait for anti-AI trade," he said.
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Even so, he argued the case for investing rests on the underlying quality of India's companies rather than a near-term re-rating trigger. "There are incredible entrepreneurs who are doing incredible work, whether it's in deep tech, manufacturing, financial services," he said. "Markets can recognise it today, it can recognise it tomorrow, but it will one day surely recognise" that value, he said, framing an investment in Indian equities as effectively a bet on the quality of the promoters and businesses themselves.
On whether a repeat of the market's March lows was likely, Shah said the risk looked low based on current conditions, with crude near $90 a barrel, US Treasury yields around 4.70%, and the rupee near 96 all already priced in. "Unless there's some news like US Treasury going to 5.5%, then can March lows come? Probably yes," he said, adding that barring such a shock, he did not see the March lows repeating.
Shah's broader message to investors was less about chasing returns and more about staying the course. "More people have lost money waiting for a correction than in the correction," he said. "Stay invested."
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