The Indian stock market will continue to rise higher on the back of improved corporate profitability in the long term despite current hiccups from the second wave of COVID-19, Kotak Mahindra AMC Managing Director, Nilesh Shah said.
Speaking at a webinar organized by the Association of National Exchange Members of India (ANMI) on ''Equity Market Outlook'', Shah said the stock market is counting on the trend in corporate profitability, which improved from a low of Rs 32,000 crore in June quarter last year to an expected Rs 2,10,000 crore in the quarter ended March 2021.
“The stock market is ignoring short-term pain of COVID-19 and looking at long-term corporate profitability,” Shah said.
"In June 2021 quarter, corporate profitability will come down but market is expecting it to rise after that. Corporate profitability is sustainable," he added.
According to him, factors such as the government's vaccination and healthcare improvement drives; lower interest rates and cost control; and fiscal stimulus to support livelihoods, will support this upward trend in the next six months.
Besides, he expects India's long-term fundamentals to remain strong as the country has managed to stay on the path of a moderate inflation regime, stabilized fiscal deficit, forex surplus, improved banking scenarios, and availability of physical and digital infrastructure.
He picked the home improvement and real estate, industrial, and digitalization sectors as outperformers in the long run.
Currently, the stock markets are at an all-time highs.
ANMI Alternate President Kamlesh Shah said the country is in a very crucial stage where on the one hand it is fighting COVID-19 and on the other hand the stock market is at its new peak.
"We are delighted by never before like participation of retail investor,” Kamlesh Shah said.
"This reminds me of theory of hope vs fear. Last year, we were engulfed with fear of COVID and markets slid to a low, but today we have hope in the form of vaccination and pick-up in economy. So eventually we have victory of hope over fear," he added.
ANMI is an association comprising around 900 stock brokers from across the country who are members of National Stock Exchange of India Ltd , BSE, Multi Commodity Exchange and other exchanges having national presence.