Offline
|
|||||||
 | |||||||
| Price + |
| Intraday Chart |
| Financials |
| News |
| Messages |
| Reports |
| Block Deals |
| Corporate Announcements |
| MF Holdings |
| Compare with Peer |
(Interview Transcript)
Watch Video| ads by google |
Girish Nadkarni of Avendus Advisors believes there is a case for near-term upside in the markets, but he thinks there may be too much pessimism built in the markets right now.
He would expect the markets to hold on to the lows in the last fall, markets may stay in the range of 17500-18000 on the top side. Because there isn't any strong expectation of good news, he believes a bout of good news will actually spur markets on the upside than the downside.
Excerpts from CNBC-TV18's exclusive interview with Girish Nadkarni:
Q: What did you make of yesterday’s move and can you make a case for near-term upside to this market?
A: We believe that there is too much pessimism built in the markets for the short-term and the earnings from some of the defensive sectors and I count technology as now being one of the defensive sectors; will probably be a little better than what markets are expecting and I therefore sense that there could be some upsides in the markets from the current levels.
Q: What kind of range would you expect the market to hold and do you think we are towards the top end of that or might the market have a little bit more momentum on the upside?
A: I would think that the low that one saw during the last fall would continue to hold for a few months at least and the markets would be range bound between that low and 17,500-18,000 on the topside. As I said there is too much negative news, there is too much pessimism build in the market and the market positions are fairly light. There isn’t very strong expectation of good news right now and therefore a bout of good news might actually spurt the markets little upwards than downside. Having said that macro economically because of the high inflation rate and the trade off for growth versus the inflation one will see the markets being fairly range bound in a period of next six-seven-eight months and therefore the best thing to play in the market in this band of 14,500 to 17,500.
Q: What are you expecting to hear this time around by way of monetary policy though and how would you approach the banks in specific?
A: I think the definite focus is going to be on inflation and managing inflation there is a school of thought, which believes that interest rates might be on their way up to fight inflation, and that will cause some trade off in the economic growth for the year. While I don’t think it is eminent right now, I guess if inflation continues to persists for sometime you will definitely see a definite hardening of the monetary policy with a possibility of an interest rates moving upwards in the next three to six months, if the inflation thing continues the way it has been. For the immediate thing there will be some hardening of the RBI policies, but the interest rate upward movement will not be there on the agenda is my sense right now.
Q: There are some newspaper reports indicating that many of the brokerage stocks will report their numbers a bit delay, the audited numbers will come only in June and that raising eyebrows. How would you approach the entire brokerage space now?
A: The last quarter definitely has seen some amount of pressure on the brokerage stock because of the fact that (1) the volumes have dropped down significantly. (2) The markets have come off so people who take positions on the market would have to reckon with some mark to market losses. (3) Where there is a large retail operation and there are retail defaults people will have to reckon with that as well. But I don’t see a correlation between reporting audited numbers because the act allows either report the numbers within one month or report full audited numbers for the full financial year within a period of three months. I don’t see a correlation between the two though I believe that brokerage stocks would face some pressure for this quarter.
Q: How would you position yourself in the upstream oil sector now? We have seen quite a bit of action in stock like RPL, Essar Oil or Cairn Energy - the refining companies not necessarily the marketing companies?
A: I would think because of the strong oil prices the exploration, the refining companies; the refining margins also are pretty strong. I would think the numbers for these companies would be quite strong. But that’s true only of the private sector oil companies. The public sector oil companies have the marketing bit linked with the refining part and therefore the pressure on the marketing side is killing which make record losses for this quarter on the back of no change in the administered prices. So pure play refining companies would stand to benefit because of the higher Gross Refinery Margins (GRMs) and also the fact that oil prices look to remain high for the time being at least.
Q: How do you see the whole saga ending? The Ranbaxy promoters are still saying that they don’t have a hostile bid but they are almost at 15% and the stock is not blinking. What’s your expectation?
A: It’s difficult to talk about the intentions of the acquisition. But as per the rule, if they go beyond 15%, they will necessarily need to make an open offer. The run up in the stock will also have something to do with short covering - what is the play right now is the pure technical factors, because fundamentally both the fall and the rise don’t seem to be justified in a short period of a month. So effectively, I think it’s only the technical factors which are at play right now and once we get played out completely and the short covering really ends, and if there is no further buying then that’s when things will settle down a bit. But if there are intentions of an acquisition, I think the next step will definitely be in terms of an open offer, which will then benefit all the shareholders and this price movement, which has gone up will be in favour of the minority shareholders because the pricing, which is calculated, would therefore be on the last price that is traded on the stock exchange.
Q: Just one word on the power and infrastructure space, slowly bit by bit you can see some buying coming in there good time to look at that whole pocket, you think?
A: I think as a sector if there is one sector, which will stand out in the next two years, it will be power and infrastructure sector. There is no doubt about the amount of investment that has been going in, the stock appreciation in some of these stocks has been very sharp, and therefore the correction that one saw in the fall was more of a result of that. I think you need to use every decline as a buying opportunity because the outlook for it in the long-term remains very good.
So I would continue to back the power and infrastructure sector and the only negative thing there is the interest rate hike. If there were to be an interest rate hike that will push down a little in terms of earnings for these companies, but the opportunities over there is so large that I would see this as a very strong sector going forward.
Disclosure:
It is safe to assume that my clients & I may have an interest in the stocks/sectors discussed
|
 |
|  |
| Related links: | |
 |
 |
 |
523.55 3.99%