Nifty Correcting To ‘Fair Value’, Says Saurabh Mukherjea
Saurabh Mukherjea, founder of Marcellus Investment Managers, expects the market to correct further towards a “fair valuation”.
The benchmark Nifty 50 is likely to fall 10 percent over the next three months to stabilise at 9,500-10,000 points, according to Saurabh Mukherjea.
Mukherjea, founder of Marcellus Investment Managers, expects the market to correct further towards a “fair valuation”. However, that does not give a reason to sound alarm bells, he said, since there are still opportunities for investors to make money every month.
“We shouldn’t lose too much sleep over that. We focus on making money from the market. I think the Indian stock market gives you an opportunity to make money every month, even in the deepest darkest downturn, and that remains true over the next six months,” he told BloombergQuint in an interview.
The Nifty 50 Index has declined 5.8 percent in the past 12 months. The nation’s equity market has remained volatile during this period on account of a liquidity crunch in the economy triggered by payment defaults at IL&FS group companies, the U.S.-China trade war, general elections in India and, most recently, the consumption slowdown.
In this environment, Marcellus Investment recommends focusing on companies that sell core fast-moving consumer goods, such as baby food and cooking oil, considering demand for essential products remains stable. “Daily essentials, monopoly franchises, clean accounting will carry on making modest sums of money through the downturn.”
This approach has given the company a return of 11 percent since December, while the Nifty 50 has gained only 0.3 percent. The company’s return in August stood at 5.5 percent, Mukherjea said.
Where the alarm bells have rung and should continue ringing is our lending ecosystem.Saurabh Mukherjea, Founder, Marcellus Investment Managers
While the government has done its bit by announcing recapitalisation and consolidation plans for public sector banks, there are much larger issues with private lenders and the NBFCs, Mukherjea said. “What we can’t expect is that the government, even though they’re acting almost every other day, I don’t think that is going to lead to a short sharp bounce in the economy. That ain’t gonna happen,” he said.
Mukherjea also disagrees that the industry’s bad loans have bottomed out. The next set of NPAs are likely to come from the auto sector and small and medium enterprises, the biggest victims of the liquidity crunch, he said.
Watch the full interview here: