Even as the stock market remains in bear grip, investors could search for opportunities in sectors such as financial services, technology, healthcare, contract manufacturing, and cloud computing, said Nilesh Shah, MD, Kotak AMC at an event on Saturday. The companies with low leverage and higher-margin also offer good opportunities to market participants, Nilesh Shah added.
"We have to search for the opportunities in the market debris," said Nilesh Shah whose fund house has assets under management (AUM) of over Rs 1.7 lakh crore. In a short span of two months, the stock market has fallen over 35-40 per cent. On Friday, the 30-share BSE barometer ended 674.36 points, or 2.39 per cent, lower at 27,590.95. Similarly, the broader Nifty 50 too settled below the 8,100-mark at 8,083.80, down 170 points or 2.06 per cent.
Speaking at the TEDxGateway webinar, Nilesh Shah further said that the pullout of funds by the foreign investors was one of the reasons for the steep fall that the markets are currently seeing. The foreigners have already withdrawn around $16 billion from the Indian debt and equity market. "Our market will return once this foreign capital comes back," said the veteran investor. The options for foreign investors are very few in other markets as interest rates are near-zero levels, Nilesh Shah also said.
"A lot of outflow in Indian market is coming from passive funds. India and China are two countries where growth can bounce back very fast. Capital will eventually chase growth," he added. Adding, the veteran fund manager said that India is expected to have substantial saving on account of the fall in the oil prices. In addition, both the RBI and the government have taken fiscal and liquidity measures that are expected to support growth in the near future.
The investors may go for systematic investment plans (SIPs) amid falling stock markets, Nilesh Shah said. "We have control over our own behaviour but we cannot control the behaviour of the market," he added. He suggested a regular investment approach to the investors. The credit risk has become elevated in the debt fund amid the COVID-19 crisis, Nilesh Shah said. "A default is not necessarily a write-off. The stressed assets can be monetised," he also said.
The gold market will get support from high liquidity and low-interest rates. "Gold bonds are far better for the longer term. Gold ETFs are better for the short term," Nilesh Shah said. In real estate, Shah suggested focussing on location and the areas where the cities are shifting. He cited how the real estate prices in Hyderabad and Central Mumbai gave relatively better returns in the last few years.