Following are the edited excerpts of an interview with Nilesh Shah, Managing Director, Kotak Mahindra Asset Management company –
Markets are facing domestic as well as global headwinds, while earnings have not thrown up any major positive surprises. What is your reading of the situation?
There are certain mid-caps, smallcaps, micro-cap stocks which have been driven in the past by greed and momentum. Their stock prices are now coming to match their fundamentals. We think there is still some room for them to go down. At the same time, there are many quality stocks which offer good opportunity to invest for a long-term investor. These stocks have corrected, and they have started making a process of bottoming out.
PSU banks under PCA are unlikely to create shareholder value unless they start growing their business. At best, they can be looked from a trading point of view. Corporate focused private sector banks as well as PSU banks which are not in PCA are worth looking once they clear their NPAs. From an investment point of view, private banks, NBFCs, make more sense but certainly one should keep a watch on corporate focused private sector banks and non PCA PSU banks for investment over the next six months.