What Nilesh Shah says on low voter turnout in elections 2024, PSU stocks, Q4 results 

Veteran fund manager Nilesh Shah believes a low voter turnout in the first two phases of the ongoing Lok Sabha elections 2024 has not altered market expectations over the continuity of the incumbent government at Centre. Hopes of acceleration in reforms during the first 100 days of the next term are still intact, Shah, who is Managing Director at Kotak Mahindra AMC, said this while speaking to Business Today TV in an exclusive interview. 

On Tuesday, polling was underway for 93 Lok Sabha seats across 12 states and union territories in the phase III of the general elections. 

PSU stocks
In the stock market, Shah said, one does not get homogeneous but heterogeneous set of stocks. He felt PSUs from defence and engineering sectors can still deliver better stock returns -- not comparable to what one saw in last 18 months, but can  outperform the market, depending upon how such firms capture the opportunities ahead. 

On the other hand, there are certain segments such as PSU banks where valuations are looking high, Shah said.

They, he said, are not necessarily a function of business but a function of low-floating shares -- 3-15 per cent is the free float on such counters, he said.

"It's in few hands and thus the price discovery is determined based on very limited float. The day these PSUs come to market to raise capital, we believe they will have to provide a significant discount to the prevailing market. One has to be selective in PSUs," Shah said.
 
Shah said the GST collections topping Rs 2 lakh crore-mark in April is testimony of success of reforms, as it has improved compliance and encouraged competitiveness. India is like an oasis and is among the fastest growing major economies in the last couple of years and it needs to continue that trend.  

Q4 results
By an large, out of 25 Nifty earnings, the growth numbers were a bit ahead of market expectations. Shah said earnings growth for Nifty firms has been 2 percentage points higher than expectations but it is also true that many sectors have disappointed, a case in mind is information technology. Shah said a majority IT firms delivered results at the lower end of market expectations. FMCG and consumer durables also reported numbers that were little below expectations, Shah said adding that firms from automobile and pharmaceuticals recorded numbers that were fairly above expectations.

"Earnings are in line so far. In the first phase of earnings, generally good results come. In the second half, we may probably see bad results coming," Shah said.