Veteran banker Uday Kotak, on Tuesday, said the performace of the economy wasmuch better in October and November than the lockdown months of April and May and that the infection trend of Covid-19 is also going down.

“Overall, the economy in October and November is looking much better in India than in April and May. I do hope the way the Covid trend is playing out in India right now is also positive,” he said at the RH Patil Memorial Dialogue 2020 when asked about a possible disconnect between the global macro economic situation, markets and actual ground reality.

These could have been priced in by equity markets earlier, he further said.

Kotak, who is the MD and CEO of Kotak Mahindra Bank, said smaller companies in the unorganised sector seem to have been more impacted by the the pandemic, while listed firms in the organised sector were less impacted.

“My sense is that there are many underlying trends being factored in by equity markets. The significant reduction in interest rates is making the core discount rate much lower. A large number of companies in the organised sector have been less impacted,” he said, adding that a lot of listed companies have become far more productive and efficient in cost reduction.

He also welcomed retail investor participation in the capital formation of the country, but cautioned that it should not lead to excesses or exuberance.

“There is a fundamental increase in financial assets as a source of investing compared to gold or land, and that is a good sign for capital formation in the country,” Kotak noted.

“It is a good sign. My only counter alert to retail investors is that they should be aware of what direct investment means – having a better sense of risk and combining it with the fact that they must be more careful of the leverage that they take, particularly in the derivatives space...” he further said.

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