Sanjeev Prasad is a rare type in the Indian stock market—a contrarian who calls a spade a spade, even within his circles.

Consider what Kotak Institutional Equities, where Prasad is the managing director and co-head, had to say in its May report titled, “What the cement sector tells us about our industry”.

“We wonder if the large downgrades to consensus estimates every year for the past 10 years and the use of absolutely ridiculous multiples in the cement sector are signs of deeper issues in the investment industry. The industry may want to review its ‘incentive’ mechanism to discourage excessive herd mentality and encourage greater diversity of views.”

A lifer at Kotak Institutional Equities since 1996, Prasad wonders why the Indian stock market continues to be gung-ho when there are many signs of trouble. The disconnect between fundamentals and valuations is just being supported by the price–agnostic buying of retail investors, he told The Ken.

“Between 2021 and 2025, a lot of money went from retail investors into domestic equity mutual funds, but a significant portion has gone into the market when it had already gone up.”

In this interview, he breaks many myths, including on “record SIP flows” and more.

Edited excerpts:

There’s the narrative that domestic institutional investors (DIIs) are acting as a buffer to foreign institutional investors (FIIs), and that’s a good thing. Does that hold, or is it a vanity metric?

Good thing from what perspective? What is good for the market need not necessarily be good for the economy.

The market index is a level. How does it matter for the economy in general? If it comes down too much, then maybe there is some panic and caution among market participants, which affects the primary market activity. But how does that matter for the economy other than for fundraising by companies?

While IPOs have got some [of the inflows], the bulk of the money still goes into the secondary market, effectively giving an exit to FPIs (foreign portfolio investors)—who have been constant sellers—along with private-equity (PE) players and promoters.