Amish Shah, head of India Research in Bank of America Securities, has advised to take precautions about the stock market. He says that in 2025, the return of Nifty may remain in single digit. Shah said that despite the recent correction in the stock market, mid and small cap stocks are still victims of overwell. He has feared more correction in both these segments in the coming days. Shah said that the return of both these segments may be less or negative than the large cap shares.
Many market experts have advised to be careful about the stock market and it is directly related to the decline in small and midcap stocks recently. After seeing the round of bull run in the last two years, small and midcap stocks have been braked in the last 6 months. Especially in the last two months, the selling segment of the market has intensified. There is a decline of 20 % from their record high in small and mid -cap stocks and these shares have reached Bayer Zone.
Many market experts, including Shah, believe that the main reason for the decline in returns is India’s valuation problem. In a special conversation with CNBC-TV18, Shah said, ‘India is currently in a bicycle of decline. In such a situation, it becomes difficult to justify the valuation above the long term average even after recent correction.
He also said that despite the recent correction, the Nifty is trading at 4 % premium from its long -term average. He said, ‘In ideal conditions, the premium should be reduced to zero. Therefore, there is a possibility of 4 % and decline from the perspective of the valuation and this year Earings growth may be 10-12 %, so a single digit return can be expected from the market.
Sector based pick
Bofa Securities downed 13 out of 14 industrial stocks in August. Bofa Securities covers a total of 14 industrial stocks. The rating of these 13 shares has been reduced from ‘bye’ to sale. However, even after 6 months, Shah is not bullish about this sector, as he is estimated to be more correction.
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