Investing in stock market ahead of festive season? Vijay Kedia's advice: ‘I will not…’

Vijay Kedia warns about froth in the SME space and advises against investing in IPOs or pre-IPOs, preferring to stick to his old investments.

Ace market investor Vijay Kedia said that the SME space is frothy and he is not ready to invest in such a market for IPOs or pre-IPOs. He told CNBC-TV18, “In this kind of market, I will not invest. I am just sticking to my old investments, and I am comfortable. When there is a typhoon, the best thing would be to stay calm,” referring to the frenzy in the unlisted or SME space and the pre-IPO placement. He said, “This is clear euphoria, and I would like to stay away.”

Stock market today: A bird flies past a screen displaying the Sensex results on the facade of the Bombay Stock Exchange (BSE) building in Mumbai. (Reuters)

Market correction is coming?

Yes, Vijay Kedia said that a market correction is likely soon but the flow of money has not been allowing any meaningful pullback. He said, “A market correction has been coming in the market, but it appears that this liquidity will not allow the market to collapse, on the whole. So, may be sectors in the market will rise on rotation, which could continue as long as the US market is holding the fort.”

Too much froth in the market?

The market is in the midst of significant froth right now, he said, adding, "I would not say that the entire market is either expensive or cheap, but you will find froth in 9 out of 10 spaces. So, I am sitting tight, holding on to my investments. Don't be adventurous in this market."

He explained, "I feel there is froth in SME space, and it can get a bit tricky for a new investors to identify the space."

Referring to instances when SME issues got many-fold bids for shares on offer, he said that some of these may have been 'pre-structured' IPOs. He said, “It did not happen on its own, to an extent it is pre-decided, I am 100% sure.”