Stacks of U.S. $100 bills in New York, U.S. (Photographer: Scott Eells/Bloomberg)

Big Money May Not Come Until Valuations Turn Cheaper, Says Kotak’s Harsha Upadhyaya

The market is over-valued to invite large investors, according to Harsha Upadhyaya, chief investment officer at Kotak Mutual Fund.

“Big chunks of money may not come before elections until valuations become cheaper and compelling,” he told BloombergQuint in an interaction.

The next six months could be a phase for consolidation in Indian equities, he said, adding that’s not the time to go aggressive on mid- and small-cap stocks as there are over-valuations. “One must do stock-specific picking,” he cautioned. “If there’s a stable government post election it should give reasonably strong returns in the next three-five years.”

This comes at a time overseas investors pulled out over $3.9 billion (around Rs 38,900 crore) in the equity markets in October, according to National Securities Depository Ltd. data.

Also, investors need to keep an eye on the earnings growth trajectory, Upadhyaya said. “We have seen downgrades for financial year 2019 after the results.” The third quarter results, he said, will be impacted by higher crude prices, raw material and fuel costs.

“To make a clear case for increasing investment, there needs to be lower valuation and that could come with the earnings risk the market is carrying.”

Watch the full interaction here: