The question that has been on the minds of all the investors on the street is “Has the market made a bottom?”
In an exclusive interaction with CNBC-TV18 on Tuesday, Nilesh Shah of Kotak Mahindra AMC commented in a lighter vein that when nobody recognises him at parties or comes up to him to have a chat is when he knows that a market bottom is near or in place.
On a more serious note, Shah commented that a major sign of a market bottom being in place is when the aggressive selling by Foreign Portfolio Investors stops or they turn net buyers. v
Shah highlighted valuations as the second most important factor. “At the end of the day, stocks are a slave of earnings. Value is what you get and price is what you pay. So if the valuations become cheap, say 14 times forward or 15 times forward, then I would certainly say that the market has bottomed out,” he said.
The third sign that Shah highlighted is geopolitical cues. “As of today we are in a situation where America is putting tariffs, their markets are going down and so are other markets. It is a lose-lose trade rather than a win-win trade. If there is a reversal in those geopolitical scenarios, the market will bottom,”
The market veteran mentioned that while there is no accurate way to predict when and where the market will bottom out, one should be a buyer when markets are cheap and vice versa.
A similar remark was made by Raamdeo Agrawal of Motilal Oswal Financial Services on Monday, when he said that the markets are near a bottom. “It may be 500 points more or 1,000 points more, I do not have an idea, actually no one has any idea,” he had said.
The Nifty 50 index is down for the 10th day running on Tuesday but is holding on to the 22,000 mark, having broken below that level in early trading. The index has corrected over 16% from its record high level of 26,277 in September last year.
