Budget 2021 acted as catalyst for PSUs, will selectively approach them: Kotak AMC's Nilesh Shah

Nilesh Shah, Managing Director at Kotak Mahindra Asset Management, said the Union Budget 2021 has acted as a catalyst for public sector undertakings (PSUs) to move up.

"PSUs are available at a very attractive valuations and one has to be careful in picking them," he said.

"We don’t want to pick up a stock because of momentum. We are institutional investors, we want to hold these assets for a longer period of time. We will be very selective in our approach to PSUs. There is a value and now there is an intent to monetise that value. At the end of the day, this also needs to be seen in execution," he pointed out.

Speaking about market, he said, "Market will always have to look at all the factors – on one side rising inflation in commodity prices and consequently rising interest rates is one factor, which market will carefully watch. Secondly, inflation will also be watched carefully by the market. Third thing which market will watch is money flow."

Market does not give one way movement all the time, it goes up and down like a roller coaster, so one should be ready for it, he said.

Mutual fund (MF) investors should follow disciplined asset allocation and should not chase momentum. “Because in the last 12 months returns have been fantastic and it does not mean that next 12 months returns also will be fantastic, be a regular and long-term investor and maintain your disciplined asset allocation," Shah added.

On fast moving consumer goods (FMCG) companies, he said, "Valuations have become a barrier in FMCG. In a period like last year first-half, where there was uncertainty, defensives were a preferred bet. In the second half of the last year, recovery was the theme and cyclicals came into play because of valuations also. My feeling is that as long as we are seeing normalisation of economic activities continuing, the cyclicals will continue to outperform the market and defensives – after their 10-12 years of glorious run – will have to consolidate for a while."