Kotak MF's Passive Fund Picks Amid Market Correction
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- Kotak Mutual Fund's August 2026 D-Kode report positions the current correction as an opportunity to accumulate quality companies passively, noting the Nifty 50 trades below its peak while Indian equities have underperformed global peers
- Satish Dondapati, Fund Manager ETF at Kotak Asset Management, recommended the Nifty 50 and Nifty Next 50 for market-cap exposure — Nifty 50 trades at a P/E of 18.6x versus its long-term average of 18.7x, while midcap (27.8x vs 24x avg) and smallcap (23.3x vs 17.5x avg) trade at premiums
- The MSCI India Index fell 6.7% over the past year while markets in the US, Japan, Korea, and Taiwan performed better, per the report
- Gold is recommended as a diversification hedge — it delivered a 63% return in 2025 but has declined 7% between January and July 2026
- The Nifty Bank Index dropped 6.2% between 24 February and 31 July 2026 following the onset of the US-Iran war, and Kotak remains positive on banking given long-term credit growth potential
- The Nifty Consumption Index is highlighted as a medium-to-long-term theme backed by rising incomes, urbanisation, and higher consumer spending, with the correction seen as a chance to enter at better valuations
- The Nifty 100 Low Volatility 30 Index is suggested under the smart-beta factor strategy for investors wanting equity exposure with relatively lower volatility during uncertain conditions
Why it matters: Indian passive investors now have a house view flagging large-caps as fairly valued versus mid- and small-cap premiums, with Kotak's Nifty Bank call made at a 6.2% post-US-Iran-war drawdown and a 7% gold pullback creating re-entry points — a stacked set of specific, datable entry levels rather than vague advice.
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