Markets await FII boost, says Dipan Mehta

The weakness in the markets was due to damp inflows from Europe. He explains that the damp FII inflow has also increased the defensive attitude in the markets with companies, such as ITC gaining 3%, despite a 15% duty hike announced in the Budget. 

Below is an edited transcript of his interview with CNBC-TV18. Also watch the accompanying video.

Q: What have you made of this weakness in the market?

A: The effect of the Budget may have been discounted. The centre of attention now is the FII flow. But with no perceptible flows from Europe, we are seeing a lot of short positions or squaring up of long positions, taking place.

With the Budget out of the way, most investors will be focusing on global markets and their effect on our markets through FII flows.

Q: Do you think the market is getting defensive?

A: That depends on the risk appetite. Sure, there are challenges and an investor may be advised to take a more defensive strategy and go for some of the stocks which are doing well today.

However, for a more contrarian player, these are levels where at least at some point of time, a trading buy will come into place because we have corrected significantly from the top, and Budget more or less have got discounted.

Now, we are entering into a period of hardly any news flow. So as I said, all depends on FII flows - if those remain even marginally positive, then this decline at least should be contained and then you could look at technical bounce at least.

Q: Any specific level you would watch out for in the Nifty?

A: I don't follow much technicals, but there is something about a 200-day moving average and for me that's the most important level I keep watching out for. If consistently starts trading below the 200-day moving average which is at 5160, then I would get really worried.