Not much margin of safety in most stocks on a bottom-up basis: Sanjeev Prasad

economictimes.indiatimes.com:

«So specifically in the case of the premium two-wheeler segment, Eicher is making very high profitability. It was a dominant player. It is the only player for all practical purposes on the 90% market share in the more than 250cc segment,» says Sanjeev Prasad, Kotak Institutional Equities.It has been a very good summer 2023. And now India's positioning in last one year has changed completely. There seems to be a FOMO by FIIs and there seems to be a lot of excitement among HNI as well as domestic investors. Do you think this market rally will last given the liquidity conditions are so benign or it is now time to really get cautious?Yes, I do not know if it will last or not last.

I am not in the business of forecasting where the market will go. All I can say is that if I look at the current valuations and compare that with let us say three-four years back or recent history, most stocks are trading at pretty much the upper band of their historical trading range. In most cases, they are at a premium to let us say where they were trading before COVID and that is a bit surprising because obviously, interest rates have gone up globally at the same time.

And you are also seeing a lot of risk emerging across sectors. So in a way, on a more fundamental basis, there is not a lot of margin of safety in most of the stocks on a bottom-up basis. The mood of the market is obviously very, very positive.

Market will do what it wants to do. There is obviously a lot of selective passing of data. In a sense, anything remotely positive is taken as a big positive.

Most of the negatives seem to be getting ignored. So you can look at, for example, some of the auto consumption names. Last four years, volume growth has been absolutely disastrous