Selective pockets of comfort in stocks after correction

Nilesh Mohan, CEO of Bajaj believes that investor interest in index and exchange traded funds will only increase as financial literacy improves.

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Nilesh Staney that investors should start early with a diversified equity fund or hybrid fund, stay consistent and keep increasing systematic investments (SIP).

Passive investing is gaining traction in India, just like it did in the US in the early 2000s. The context, however, is different. In the US, most investors are institutions who prefer low-cost, index-based investing. In India, the mutual fund industry is still led by individual investors, many of whom are first-timers or have recently entered the financial markets. We are seeing increasing interest in index funds, ETFs, and fund of funds (FoFs). This trend will accelerate as financial literacy improves and more investors seek simple, rule-based products.

However, active funds will continue to play a dominant role in India for the foreseeable future. Passive funds are not a replacement for active funds, but a complement.

How are current valuations in listed and unlisted markets?

Valuations in the listed space are mixed. The correction between September 2024 and March 2025 created selective pockets of comfort. It appears to be a heterogeneous market. In the early stages of an upcycle, it's not unusual for certain stocks to look expensive at first glance. But as earnings growth begins to catch up, valuations start to look reasonable. We're seeing quality businesses with strong growth visibility available at fair prices.

What are your stock selection criteria?