There’s no serious bubble in the stock market: Uday Kotak
There is currently no indication of a bubble in the market, according to billionaire banker Uday Kotak.
The veteran banker, however, believes that there are enough checks and balances in place to prevent any major issues.
"It's still froth, little bubbly but not out of control. As long as we keep a watch we can sustain capital formation," said Kotak at the SebiNISM Research Conference on Wednesday.
Kotak's statement comes days after the Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch warned of "froth" in small- and mid-cap stocks, which appear like "irrational exuberance". She had also suggested mutual fund trustees look at whether lump sum investments into the small- and mid-cap funds are appropriate.
During his speech, Kotak noted the significant growth in the futures and options category, but clarified that it is not posing a risk similar to the bubble of the 1980s in Japan. Separately, Kotak discussed the need to regulate and form policies for cryptocurrency. Bitcoin is current hovering around t h e key-$70,000 level, a gain of three times over the past one year.
"UK, US and Europe are legitimizing crypto. Investors with savings are pooling their money into Bitcoin, taking very critical pools of resources that would go into capital formation away. However, investors are focused on protecting their value," he added.
Kotak also emphasized the need for India to look at building a reserve currency and also consider rupee convertibility, if it is looking at becoming one of the top 2 economies by 2047.
The time has come to decide how, over the next 10-20 years, India's growth and development will be and how the country can improve its position as a potential currency of trade, he added.
Kotak also emphasized the need for India to build a reserve currency and also consider rupee convertibility