Look at IT, FMCG, pharma cos now: Rel Money

A: We have been talking about and we need to continue talking about oil and inflation. These are the two critical factors, which are driving the markets all over the world. If oil starts coming down or at least show signs of coming down, market will take it as a positive cue. In Indian markets, the inflation plays a very key role. Today there is a lot of nervousness going to be there towards the later half of the day once the inflation number comes out and it will probably be very close to 12%. Once that happens there would be some amount of nervousness and over the next few weeks if we see inflation climbing to around 13%, which is the kind of consensus emerging as of now, Reserve Bank of India (RBI) probably will need to come and take further action in terms of hiking either the benchmark rates or CRR or maybe both. If that happens again there would be some amount of effect on the markets, real estate, banking, capital goods, automobile all these sectors would be under significant pressure.

If you really look at it, probably the sectors, which will withstand this will be the IT because rupee has been appreciating and they would be benefiting from that. FMCG and pharma also to an extent. These are the sectors which one can look at this stage. Other than that markets would continue to remain under pressure for the next quarter.

Q: How do you gauge retail sentiment at Reliance Money right now?

A: This is something very interesting. In fact we have not seen too much of deterioration in the sentiment as far as retail is concerned. Yes they are worried and concerned and they are also watching the market just like all of us but they have not flooded the market nor have they panicked, which is a very good sign. If you look at the mutual fund numbers, assets under management during the month of June after a long time this has come down. But the component that has brought it down is actually the withdrawals from the liquid funds that is primarily on account of withdrawals by banks and large institutions who have other use of money and who needed to pay advance tax and withdrew money. Retail has not deserted the capital market in mass - Systematic Investment Plans (SIPs) through which retail has been investing in market are continuing and there is a regular flow. In fact, very surprisingly during the last few days we are getting lots and lots of inquiries from investors asking whether we should start buying now or maybe we will wait little longer, very positive sign-they are actually standing at the door. They want some cue before they jump into the market.