Quality stocks will lead the rally: Vijai Mantri, Pramerica MF

In a chat with ET Now, Vijai Mantri, MD & CEO, Pramerica MF, shares his views on markets.

ET Now: Yesterday’s correction was more focused on the broader markets, the midcap index cracked 3.5%, small cap index cracked about a per cent.

Vijai Mantri: Yes, and if you look at yesterday’s number of the broad market, he market showed a minor upside but there was mayhem on many counters and it is largely driven by many non quality stocks going up for only in the hope of good earning and good prospect.

Our view has been consistent that in Indian market over next three to five year leadership would come from top 60% and 40% of the market participant either have to sell their assets and do restructuring, which we have seen over last one year.

If you look at June quarter numbers, whatever steps the corporate India has taken have hugely improved the margin of the company and that led to expansion and return on equity and that would lead to rally in the market but for the time being you see some of these kind of corrections.

Immediately there is no trigger in the market to take market either way. It will go by corporate earning and expectation of the corporate earnings. You will see a continuous expansion in return on equity and margin in next 12-14 months and with that the top line growth. But it is very important that people remain absolutely invested in quality stock and do not touch non-quality stocks because in the bull market all kind of stock goes up and when the correction happens the non-quality stock goes down much more significantly.

Going forward we see the quality stock leading the rally and the market being in good shape.