Moneycontrol India :: News :: See Sensex at 18k levels in Q1 FY09: KR Choksey Sec :: Steel Authority of India :: MARKET OUTLOOK :: Deven Choksey,KR Choksey Securities ,markets

[+] SHOW

You are here : Moneycontrol » Markets Home » Market Outlook

Stock Round Up

Market Round Up

Pre Market Cues

More News

More Markets

See Sensex at 18k levels in Q1 FY09: KR Choksey Sec

2008-03-27 18:11:09 Source : News Bulletins/CNBC-TV18
(Interview Transcript)

Email

Print Version

Watch Video

Deven Choksey of KR Choksey Securities said the markets are still trading rangebound. He feels the Sensex can touch 14,700 in a worst-case scenario. "However, in April to June quarter we should see an upside to 17,500-18,000 levels on the Sensex," he told CNBC-TV18.

Excerpts from CNBC-TV18�s exclusive interview with Deven Choksey:

Q: What are you expecting to see in the next few days?

A: We are starting the next series with relatively lower amounts of open interest positions. The problem is largely due to the STT effect coming into play from next month onwards, which is the series starting from tomorrow. Some of the arbitrage players have been active in the market and are taking big positions including the rollovers of their positions to the next series. Probably, they had opted for the rollover and allowed the result to expire. The result of that we are seeing even in lower volumes on the expiry date in F&O market. To a greater extent, we are starting the next series with a lower OI position.

We are also going to see some of the important developments happening in the subsequent months of April and May, particularly with the earnings season starting and the direction calls coming in from the corporates. Markets would see a lot of activities. We would probably see not many companies coming out with a new direction call. At the same time, portfolio investors and mutual fund investors particularly would shift their portfolios to some of the high growth companies.

We are still not out of the rangebound movement as far as the markets are concerned. In a worst case scenario we may hit 14,700, but in April to June quarter we should see an upside as well to 17,500-18,000 levels on the Sensex. To a greater extent, it is going to be continued rangebound momentum as far as the quarter is concerned with some amount of positives coming in from the corporates, which will probably take care of the downside, as far as the market downside is concerned.

Q: Is that the way most traders are feeling about the next series? Did you get the sense that a lot of people were running some kind of short positions that have all got chopped today, which is why rollovers seem so much lower?

A: Yes, there has been some short covering in the last few days with the markets going up in last few trading sessions. Some hedge funds have also taken positions out of the short that they have created. They went long in some positions largely to produce absolute returns this month, which otherwise hasn�t been kind to some funds who have not been able to grow portfolios for their investors as far as profit are concerned.

So, may be some position has been taken at lower levels, particularly when they saw that there is not much supply coming in at lower levels. Long positions have been taken and trading profits are been booked by them as seen yesterday and in today�s market at higher levels. Short covering has taken place in the last 2-3 days to book some amount of profit at the end of the month.

Q: Will things shape up for the midcap space in the next few months, or will it continue to be extremely volatile? Do you think interest is coming back in some stocks now outside the index story?

A: Yes. In some companies there is going to be interest coming in from a lot of quality investors. Some long hedge funds are taking interest in some midcap ideas which are available practically at very cheap valuations. They have been taking interest in some midcap companies. If valuations become attractive then probably buying will emerge and they will become very tempting for investors. You would see selective actions coming into these companies in the next one quarter as well.

Q: Do you get a sense that people are still stuck in these two stocks - RNRL and Reliance Power?

A: There are people who preferred to stay long in this particular stock when they could manage to pay the mark-to-market difference. So, they are still stuck. There may not be too big a position because a large part of the position got squared off particularly in January itself. Subsequently, those who held on to these positions are the ones who are bearing mark-to-market losses. They are continuing and are stuck at the higher price, so may be a smaller component of people definitely are holding on to their positions.

Q: With the start of the April series till the first results start coming out, what do you expect the market to do?

A: It will remain positive because results expectations are going to be positive. Having seen the advance tax numbers, I think it is going to be all the more positive. In the global economy space, if there are no major negatives, then our market would remain steady. This week, the relative gravity of the fall in our market compared to other Asian markets with the US is relatively less.

So even if there is negative news coming in, the kind of falls, which we have seen in earlier months, may not be seen in April. That probably makes a point that yes we may have an upside to talk about than a downside. If the Sensex stays above 16,600 levels for a few days then we will stay above that level and trade around 17,500. There may some amount of profit booking there but that�s going to be the trend of the market. So at higher levels some profit booking and at lower levels valuation-based buying will emerge in this market this month.

Q: What are you expecting to see in the next series?

A: We will see some amount of upside and probably the downside is limited at this point of time. The market has to go down and then it has to break below 15,600 levels on the Sensex and settle between 15,600 and 15,300. Otherwise, I see the market going above 16,600 plus levels in the month of April. Probably, we will make an attempt to stay in that range of around 16,500 to 17,500 in this period.

I am expecting a good corporate performance and based on that the corporate guidance for the next financial year FY08-09. That is going to be the key point that I am going to take from the month of April. That is where this particular ranegbound moment on upside is coming from.

Q: Between the ferrous and the non ferrous lot, what makes you most comfortable going ahead? Would you bet on the Hindalco-Nalco kind or do you think SAIL and Tata Steel can continue to outperform in the non-ferrous lot?

A: At this point, I am going to touch none of them. What we saw last month was largely because of the follow out of China�s power crisis and subsequent hike in metal prices.

In my viewpoint, it is going to be a temporary problem. That is probably and the reason for which I wouldn�t like to touch them.

We already have a lot of other stocks, which are substantially de-rated and where the earnings clarity is there. That makes more comfortable investment choice as far as those companies are concerned.

Particularly, I am referring to some of the realty stocks which are substantially better or some of the capital goods companies where earnings visibility is clear for the next 3-4 years, even at this point of time. They may be available at a good valuation also.