Small-Cap Valuations Above Average But Not In Bubble Zone: Bajaj Finserv AMC CIO

Markets are tracked on the basis of fundamentals and trends, with some behavioural indicators being followed to determine whether the prevailing sentiment is bullish or bearish, according to Nimesh Chandan, chief investment officer at Bajaj Finserv Asset Management Ltd.

From a fundamental perspective, fair value levels are apparently being approached in terms of the Nifty levels, Chandan told NDTV Profit's Niraj Shah in an interview.

The small-cap universe seems to be trading slightly above historical average, indicating above average valuations although not reaching a bubble zone yet, he said.

The Nifty is considered to be close to fairly valued. In this scenario, the emphasis lies on making specific and informed stock selections to generate favorable returns in 2024, he said.

On the behavioural front, the sentiment remains bullish, according to him. The indicators across various markets and time frames consistently show momentum, suggesting that the bullish sentiment is likely to persist. This persistence is potentially fuelled by the expectation of interest rates peaking and the anticipated increased inflows into India, Chandan said.

Outlook On Pharma Sector

Chandan highlighted that the pharmaceutical sector experienced several years of underperformance. However, a shift occurred in the market sentiment favouring domestically oriented stories initially, making them a preferable avenue for investment.

Subsequently, with a few listings and positive market developments, the entire sector began to undergo upward rerating, the CIO said. "We continue to be bullish on the domestic pharma space because we see that as a structural story."

He is also positive on the other healthcare space—hospitals or diagnostics labs—and said those offer good opportunities for a long-term investor.

Views On IT

Chandan is a "bit cautious" on the information and technology sector.

In the U.S., all indications suggest the likelihood of a soft landing rather than a resurgence of growth. The Federal Reserve is considering rate cuts in response to this anticipated economic trajectory, he said.

Watch The Full Interview Here: