“There may be a little froth, it could be a little bubbly but not out of control,” said Kotak, founder of Kotak Mahindra Bank at a conference held by Sebi and National Institute of Securities Markets on Wednesday which was attended by top regulatory officials.
“What we need to keep in mind is that speculation is a core part of markets,” said Kotak.
He said there are enough “checks and balances” in our system today to compare ourselves to serious bubble territory.
“But, as long as we keep a watch and manage it well, we can create sustained capital formation going forward,” said Kotak.
Buch, on Monday, had raised concerns over stretched valuations of small- and mid-cap stocks.“There are pockets of froth in the market. Some people call it a bubble, some may call it a froth,” Buch had told reporters. “It may not be appropriate to allow that froth to keep building.”Kotak said the future competition for markets is going to come from cryptocurrencies.
“India’s future in the context of building long-term capital for its phenomenal growth needs is the concerns of what’s happening right now in the US and the development of an alternate market currency, which is crypto,” he said.
“I am at a loss how gold or crypto really creates capital formation. But investors are looking for protection of their capital. And they put it into this as a counter-edge for governments worldwide who misbehave and are irresponsible on the fiscal or monetary side over long periods of time.”
