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Motilal Oswal's Aashish Somaiyaa: Market is not as irrational as it is made out to be

Updated : August 21, 2019 03:11 PM IST

Amid the ongoing slowdown in the economy, there is a pervasive belief that the central government will announce stimulus to revive growth. Aashish Somaiyaa, CEO of Motilal Oswal AMC, discussed prevailing market sentiment and his hope from the government about economic revival in an interview with CNBC-TV18.

“There are regulators and there are governments and they have a role to play. So there is no reason to believe that there will be no intervention. That will be an extremist view. When the intervention would be there and what kind of intervention could be there is something different people will have different expectations, there will be different speculations about it, will it meet expectations or not, I don’t think there can be an intervention which will meet everybody’s expectations," Somaiyaa said

"Yes, there are responsible regulators and responsible governments and at some point in time, you will see something coming up,” he added.

The markets have been in a downward spiral after touching all-time highs in the aftermath of the 2019 Lok Sabha elections exit polls and the subsequent results that returned the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) to power with an emphatic win.

Somaiyaa said that the markets aren't irrational as the conventional thinking goes and they are merely in a consolidation phase currently.

“Market is not as irrational as it is made out to be. We have seen these kind of false starts at least three-four times in the last five years. There have been phases in the market and for some time we are in a consolidation kind of phase and we will have to see what kind of developments come up in the next month or a couple of months,” he said.

Somaiyaa said that there has been an improvement in inflows towards the second half of FY20 although the numbers are still some way away from matching those of early 2017 and 2018.

“Since the time this financial year has started, April and May were the months which were less than encouraging but from then on if you see June and July and if I pick the trends, August – more than half way through – there is a firmness as far as the numbers are concerned.

"Clearly, we are not at the Rs 20,000-25,000 crore net flows which we used to see end of 2017 or early 2018 but whatever Rs 8,000-10,000 crore kind of net flow that we are seeing right now seems to be stable.

“Systematic investment plans (SIP) flows are definitely continuing and in fact SIP registrations or the net accretion on a month on month basis has been rising. Apart from that, one can see some smart money coming back,” he added.

Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
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