“Segments which are linked to the broader capex side of the story, are showing good growth and the narratives are very strong. As we look towards the economic upcycle over the next few years, some of these companies are going to grow meaningfully 30-40% higher from where they are in terms of their business revenues. ”
What is going to happen is that eventually the stock prices finally has to find its support in terms of the earnings growth. And in the long term, it is the earnings growth that is what is going to define the percent increase in the stock price.
I think one needs to be very clear about these themes really showing in terms of numbers and those will eventually do well is what I feel and hence the focus has to be there on quality and in the short term, it is very difficult to take calls but to me these small falls will be brought into and hence I do not see major correction unless there are some big negative events which turns out.
Stating that it fails to find fundamental reasons behind the steep increase in stock prices of several midcap and smallcap stocks, Kotak said, the primary driver of the rally appears to be irrational exuberance among investors, with high return expectations being driven by the high returns of the past few months.
Clients decision making is a bit delayed. But what these managements were sort of also alluding to was the fact that the deal pipeline looks okay which I think anyways when we look at the numbers most of the companies if one focuses on the deal pipeline those are okay.