India unlikely to beat EM peers in next 6-12 months: Shankar Sharma

Indian shares fell after the Budget as the stock market was looking for short-term boosts, while the government's budget was actually a long-term vision, said Shankar Sharma, Vice-Chairman and joint MD of First Global.

"If you were part of the management and implementing a 12-year plan or vision, I am sure your stock will tank too because markets are driven by immediate concerns. So, I think that is the reason why the markets fell because it wanted something right now, in the next few months or at least the next 12 months," he said.

NBFCs

"It was positive that the government tried to addressed concerns of NBFCs, however, I don't think giving underwriting for the first 10 percent is a good move because that induces bad behaviour," said Sharma.

NBFCs brought upon the troubles by themselves as the issues did not rise from something that was beyond their control.  "Most of them were running a much-skewed business model in terms of liabilities and most of them were going out and chasing assets that nobody in the right senses should be doing," added Sharma.

"Yes, they needed some degree of support, which the FM has provided, but I don't think you need to go overboard on that, this is a part and parcel of a free market system that companies that do poor quality lending, will go bust," he added.

Midcap, largecap stocks

Midcap and smallcap stocks had been beaten up badly in the last 18 months and it is unlikely that they will fall any further, he said.

"There is huge amount of value in smallcaps and in some midcaps. I do not see a lot of them going down any lower because they are already off 30-50 percent," Sharma said.

Large-cap stocks have seen a very narrow bull market, with just a handful of stocks have driven returns to the last several months, and this situation does not pan out well, according to Sharma.

Global markets

Sharma said he is very optimistic on global equity markets. "I am very bullish on the US and it's been amazing. I don't think that's slowing down. In terms of stock market return any time soon so. I think the US is a rocking market," he said.

India is likely to underperform its emerging market peers in the next six to 12 months.

"If you look at Brazil and Russia, they have beaten India by a wide margin. India is going to struggle to give you even market returns relative to EMs," he said.