Mihir Vora, director and CIO of Max Life Insurance, spoke to CNBC-TV18 about the current trends in stocks market and his views on NBFCs.
“The relative valuation trend has been going around for quite some time. Even in this correction, from 11,500 to 10,200 odd, we did see that the private sector corporate banks especially did manage to outperform. Of course, it was partly because of the fact that we had some leadership changes expectations which we have met and the uncertainties regarding top management were taken care of but having said that, we did start with very low valuations even at the index levels of 11,500 and during this entire correction, we have seen these stocks on the private sector corporate banking side hold on quite nicely. On the other side, we are also seeing a bit of a shift from the retail oriented private banks to the corporate oriented private banks because overall investors and institutions were quite underweight on the corporate banks,” he said.
Speaking about the non-banking financial companies (NBFCs), Vora said, “As far as valuations are concerned, we have seen the markets discount pretty much a bad scenario for many of these players. So the question is who comes out of this unscathed and we have seen the studies of the CP maturities in the refinancing requirements which are likely to peak in the month of November. So I think the next three-four weeks are very crucial. We would rather wait and watch and see how the situation pans out but I don’t think valuations are an issue at all anymore. It is just a question of who comes out of this with the minimum injuries.”
“Given the shock that we saw in the NBFCs space, we might get disappointed in some of the segments like housing loan growth, overall NBFC loan growth and the associated sectors which they were lending to like personal spending, consumer discretionary and autos. Early indications are that Dussehra season has not gone very well for the auto segment. So to that extent, the hopes of a reasonably good recovery in the December quarter probably maybe toned down a little. So to that extent, the markets having corrected so much, we are in a zone where we should wait and watch,” said Vora.
“The midcap and small cap stocks have seen the maximum amount of correction in the last six months anywhere between 30 percent and 40 percent on the indices and of course much more probably at the stock level. So the time to buy is obviously when nobody else is looking at it when there is extreme pessimism,” he said.
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First Published: IST