“People buy first and then find reasons to justify their decisions, that has to change,” said Chandresh Kumar Nigam, MD and CEO, Axis AMC in an interview with CNBC-TV18.
This is a very different market as compared to when COVID-19 started about 20 months back, Nigam noted. He believes, one thing every investor should try to learn is how to evaluate the new-age businesses.
“As an AMC and as an investor, we have to have exposure to these stocks but have a more portfolio-based approach, have a number of these stocks in our portfolio, have more conviction on the five-seven year validity of the business model and then hopefully some of these will come well. So the approach for some of these companies is different from what we have used in the past but there is no way we can stay away from these businesses,” he said.
There is significant momentum in the market.
"That breadth is something that has led to a major shift and people looking at exploiting and taking advantage of a large number of companies that are likely to do better. The reality is that there is tailwind beneath a large number of companies at this point of time,” said Nigam.
According to him, the pendulum has moved onto the other side, valuations are discounting a significant part of the future and hence any sign of any bad news will make people refocus on valuations.
The Nifty is three percent in the red in the last five trading sessions. Over the past month, the benchmark has seen 3.3 percent correction. However, the bulls are staging a small fight back today (Nov 23) and the index is 0.5 percent in the green, at the time of publishing.
In the next two-six months, there will be ups and downs as people figure out whether inflation is going to have a big role to play.
"What happens to liquidity etc and then more on a nine-twelve months basis, it will be a very bottom-up kind of a market where people will be able to take a call for three years and beyond," said the Axis AMC chief.
“The rising tide which has lifted everything will in some sense fade, it will not get higher certainly and so it will be the return of the bottom-up stock-picking,” he shared.
For the full interview, watch the accompanying video.
Catch all market updates here.