Uday Kotak says not near bubble territory after SEBI chief flags froth in smallcaps, midcaps

Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch raised concerns over frothiness in small cap and mid cap stocks.

Veteran banker Uday Kotak said that there is currently no indication of a bubble in the market as he said that there are enough checks and balances in place to prevent any major issues. Acknowledging the presence of some frothiness and bubbliness, Uday Kotak said that it is not yet out of control. The statement comes after Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch raised concerns over frothiness in small cap and mid cap stocks as she referred to "off the charts" valuations in these market segments which indicates price manipulation in small and medium enterprises segment.

Uday Kotak, Founder, MD and CEO of Kotak Mahindra Bank Ltd, talked about Sebi chief's remarks on froth in the market. (HT Photo)

She said that there are segments where valuation parameters are "off the charts" and not supported by fundamentals. “These appear, as regulators like to call it... ‘irrational exuberance’," she added.

What Uday Kotak said on Sebi chairperson's remarks?

Uday Kotak said that there is a significant growth in the futures and options category which shows dynamism of the market.

"The time has come for us to foresee over the next 10-20 years for India's growth and development is how can India look at improving its position on the currency side to get larger and larger positioning as a potential currency of trade on its capacity," he said at the SEBI-NISM Research Conference.

Talking about cryptocurrency, he said, "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. Bitcoin has gained 3 times over the past one year.