Uday Kotak advises investors to exercise caution in stock market
Mumbai: Billionaire banker Uday Kotak wants investors to exercise caution in the stock market.
“With stocks reaching new highs every day, the current bull run of the capital market looks extremely tempting. I would advise investors to exercise caution as stock prices are moving up. Organised savings are chasing limited supply of stocks,” Kotak said in a letter to employees of Kotak Group on Monday.
“Keeping aside the valuations and earnings argument, the factor that worries me is debt instruments are being perceived as high risk (in view of hardening of interest rates and the resulting erosion in value of the instrument) and that investors are shifting from debt to equity which is being perceived safer in comparison.”
Mint has reviewed a copy of the letter. A Kotak Mahindra Bank spokesperson did not offer any comments.
The Sensex rose 27.91% in 2017 to end at 34,056.83 points. These are its best gains since 2014, with domestic institutional investors (DIIs) buying a record Rs90,834.80 crore worth of Indian shares during the year.
On Tuesday, the 30-share barometer closed at 33,812.26, down by just 0.49 points.
According to Kotak, a healthy and vibrant financial market is good, but capital formation and job creation are equally important for the health of the economy.
He also said that rollout of goods and service tax (GST), introduction of Real Estate Regulatory Authority, Insolvency & Bankruptcy Code (IBC) along with thrust on digital banking and payments are transformative developments, which can yield positive results for the common man and the Indian economy in the long run.