Nikhil Kamat, co-founder of Zerodha and True Beacon, believes that the valuation of the stock market is a bit expensive and there are many such dangers in the year 2022 including inflation, fiscal deficit and the third wave of Corona, Which can lead to a fall in the stock market.
Nikhil Kamat in an interaction with Live Mint said, “I don’t think the current valuation of the market is justified. It is definitely that a lot of momentum and capital is looking for avenues to invest in the stock markets. But then I would like to exercise caution. I am in favor. I believe the market is a little more expensive than it should be.”
When asked what he sees as a bigger threat to the market in 2002? Kamat said, “Inflation is a big issue not only in India, but all over the world. If you buy risk-free bonds or deposit money in a savings account or take a fixed deposit as of today, inflation will increase. The real return on adjusting the FDs is in the negative. Because of this a lot of money has been invested in the stock market in the last one or two years. The only solution for RBI is to raise the interest rates and they will soon at some point or the other. It has to start. Once this is done, the already looking bad NPA picture might get worse. This is because we have just come out of covid. I think this is the first major risk to the market “
Shares of this smallcap company gave a scintillating return of 10,400% in 9 months, valuation reached $1 billion
Kamat further said, “The second threat to the market is the fiscal deficit. It seems no one is looking at it the way they should. Last month our fiscal deficit stood at $15 billion, which is $15 billion.” This is the highest figure in the last about 14-15 months. Our net reserves as a country are around $600 billion. But if you end up with the same deficit of $15 billion every month, soon it will be $600 billion net. Reserves may run out. I think it is a systematic risk that needs to be addressed.”
The co-founder of Zerodha further said, “I think the third threat is the corona pandemic. Once again its cases seem to be increasing. I don’t know how long the next wave is going to come. Maybe January, February or March whenever it is. Come, our economy will slow down again. I don’t think we have studied all the risks accurately.”
Nikhil Kamat said, “I think 2022 will be an interesting year. But I don’t think we will get the wild bull run we saw last year in the market, this year also.”
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