Nilesh Shah, MD at Kotak Mahindra AMC, spoke to CNBC-TV18 about the correction in domestic stocks and shared his outlook on select stocks and sectors.

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"FPI outflows and weak corporate commentary is leading to market fall", said Shah.

“Partly there has been flows-driven impact led by FPI sell-off, even though domestic institutional investors are buyers at this valuation. Second is the sentimental impact where the commentary given by results are slightly negative in tone. So, a combination of flow and sentiment is resulting in the current scenario,” he said.

“From a pure taxation point of view, what we read is that it is about Rs 400 crore by way of surcharge. It is an insignificant amount from an FPI point of view, but it is more the noise created around the surcharge which has hurt FPIs. My guess is that selling is more from corporate-based FPIs rather than trust-based FPIs, though I do not have any data to prove it,” he added.

Speaking about the weak Q1 earnings, Shah said, “We are of the assumption that the government, regulator, and entrepreneur all will take corrective action to come out of the subdued phase. There will be higher liquidity in the banking system and since May 2019 we have been witnessing that. At some point in time, that liquidity will be reflected in the economy.”

“There will be more rate cuts where real interest rate burden on entrepreneur becomes reasonable. 75 basis point rate has already been cut, more will follow,” he added.