Valuations fair but would like to see some consolidation: Kenneth Andrade

The bulls have been on the charge in the recent past. The Sensex recorded a move of over 1,000 points for the fourth time in 2021 only yesterday. The question on everyone's mind is if the rally will sustain or is a correction around the corner?

Kenneth Andrade, Founder & CEO of Old Bridge Capital Management believes that market valuations are fair but he would like to see some consolidation.

“From a sentiment perspective and from a market perspective, you are seeing exactly the reversal of what you saw last year. When everyone was panicking, there was a lot of fear in the system, capital went out of the system and today you are seeing a lot of that evaporate. The fear has given way to greed and the breadth of the market is expansive. So, I would like it to consolidate. Valuations are fair, they are not very expensive, but I would like to see things consolidate,” he said in an interview with CNBC-TV18.

Andrade isn't too worried though. He said that the macro indicators are good and will continue to be good, but it is mostly all priced in.

“I think the economy macro numbers are great and they will continue to do well for a couple of quarters before they normalize somewhere towards the end of next year. From there I think it will be a new start for whatever we have seen so far,” he said.

He cautions though that there is some amount of caution needed as all companies won't secularly deliver over the next several years.

“When I say that the reversal to mean is happening, it is that what you extrapolated over the next 1 year in the market somewhere in April, May or June of 2020, in February, March of 2021 you are extrapolating near term numbers into a longer-term trend which is showing up in stock prices. Now, all companies will not deliver that secularly over the next couple of years which is where I think there needs to be a little caution exercised,” he explained.