Use corrections to add quality stocks, follow a stock-specific approach, says Jaideep Hansraj of Kotak Securities

livemint.com:

Jaideep Hansraj, CEO of Kotak Securities says investors should continue investing through SIP as timing the market is a challenging task. In an interview with Mint, he says investors need to be stock-specific or bottom-up, as the top-down approach may fail.

Edited excerpts: Currently, with high valuations, strong liquidity and positive macro indicators, our markets are experiencing shallow corrections. We advise our clients to continue investing through SIP as timing the market is a challenging task.

As the broader market valuations are rich, investors could use market correction as an opportunity to add quality stocks (strong business model and corporate governance) from the long-term investment perspective. Also Read: Indian stock market sentiment upbeat but investors need to be cautious, says Divam Sharma of Green Portfolio, PMS Investors need to be stock-specific or bottom-up, as from here onwards we believe the top-down approach may fail.

Here, we advise investors to keep booking profits in midcap and smallcap stocks which are trading at stretched valuations and be selective in this space. Also Read: Morgan Stanley sees significant opportunity for bottom-up stock picking in India; lists its preferred sectors The likelihood of certain outcomes becomes much clearer after state elections.

We believe that the market has already factored in this information and is now considering other factors such as the possibility of a rate cut from the Federal Reserve, a forecast on the monsoon, and an announcement from the upcoming Union Budget. We also believe that the large ‘disconnect’ between price and value may be sustained, notwithstanding the rich valuations across sectors and stocks, if the BJP were to win the forthcoming