Markets not in a bubble, just a bit ‘bubbly’, says Kotak

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Even as the Indian stock markets tumbled over 1.5% on Wednesday, industry veteran Uday Kotak said the markets were not in a bubble.

Speaking at a conference organised by the markets regulator Sebi in Mumbai on Wednesday, Kotak said the markets were a ‘little bubbly’ but were not out of control.

Kotak’s comments come just a couple of days after Sebi chairperson Madhabi Puri Buch said the markets showed signs of froth builing up in the small and mid-cap stocks. She said “It may not be appropriate to allow the bubble to keep building, because’ when it bursts, they impact the investors adversely. That is not a good thing.”

Reacting to Buch’s statement, Kotak said “I believe at this stage, we are nowhere near that risk and there are enough checks and balances in our system today to compare ourselves in serious bubble territory.” “As long as we keep watch and manage it well, we can create sustained capital formation going forward,” he said.

Meanwhile, Kotak also pitched for greater quality on the taxation front between equity and debt, as asset classes to give more clarity for investors and incentivise the right set as per priorities.

“In the context of the equity culture, I do believe that there has to be some streamlining of taxation across different classes, including double taxation on dividends,” he said, pointing out that the highest marginal tax on debt is 39 per cent while the same on dividends effectively is 57 per cent.

He also pitched for the country to claim the space of making the rupee as the preferred alternative to the US Dollar to settle global trade, saying the world cannot go to China for this and we need to have a 10-year plan on the same.

With inputs from PTI