A falling stock is not always cheap: Kotak explains the role of earnings and valuations
Indian markets moved lower in a quarterly results development.
· ET Stocks, Economic Times Markets
Kotak Institutional Equities argues that stock prices are driven by earnings expectations and PE multiples rather than market flows or liquidity. Rebutting myths about FPI outflows and IPOs draining secondary market cash, the brokerage highlights business fundamentals and mental DCF valuations as the true price drivers.
The analysis
This is an Index / institutional flows event. Passive and institutional flows move price independently of fundamentals, and around rebalancing dates they dominate it.
Because the driver here is macro rather than company-specific, the read-through is to index-level positioning rather than to any single name — correlations tend to rise when the whole market faces the same signal.
Market context
- This is a market-wide development — its reach goes beyond any single stock.
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