Market veteran Shankar Sharma is of the opinion that the worst is over for the Indian stock market although some macroeconomic challenges still persist.

Sharma said, "I think the worst is behind for India as a market but I am not so sure it is behind for other markets. I think the worst is over in terms of the stock market part of India. For the macroeconomy part, there are still some challenges out there. Inflation is a bit of a smoke and mirror game in which nothing really comes down, it is only the rate of change that cools off because of the higher base effect and the market is seeing that and will start reacting to that eventuality. So for the Indian stock market, the worst is over."

According to Sharma, there is a clear bull market in the small-cap space. He said the market has probably given once in a 10-year opportunity to invest in the small cap end of the market.

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"The clearest bull market that I see is in the small caps and I think in the next few months you are going to take out the highs of January 2022 and go much higher than that over the course of the next 12 months or so. So I think this is probably once in a 10-year opportunity that the market has given us, especially for the small cap end of the market.”

Sharma believes that new-age companies are reverse compounders.

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He said, "New age companies are reverse compounders. In the 2000s, the then-new-age tech companies halved and then halved again till they were down 90 percent. In the current new-age companies, it seems exactly the same. So this is nothing new. The biggest problem for a lot of these companies is not that they were overvalued to begin with, they are overvalued even now and are overvalued even if they were to turn profitable.”

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First Published:Jul 28, 2022 7:36 PM IST