“Well, it reminds me of a joke by Ajit – to put a person in liquid oxygen; the oxygen won’t let them die, and the liquid won’t let them live. Markets are similar. Continuous mutual fund inflows prevent corrections, while fundamentals don’t allow strong rallies. We have been stuck in a narrow range for almost a year. Valuations need support, yet there’s a steady supply from FIIs, promoters, and IPOs. There’s money on the sidelines, but it isn’t finding attractive valuations,” Mehta explained in an interview with ET Now.
On the impact of GST cuts, Mehta said, “Savings are hardly a few hundred rupees. But consumption will boost consumer lending. Bajaj Finance, for example, benefits as high-ticket items bought on EMI – cars, appliances, air conditioners – will see higher demand. So, rather than the capital markets directly benefiting, fundamentals improve, higher volume leads to higher profits. Banks and NBFCs will gain from lending and better consumer sentiment, but it doesn’t automatically mean more funds flow into equities.”
Mehta’s insights highlight the delicate balancing act in Indian markets: persistent inflows prevent sharp corrections, while structural valuations and cautious investor sentiment continue to cap upside potential.
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