Sandeep Shenoy, Anand Rathi Financial Services feels that 5600 level will be a good support for Nifty. He told CNBC-TV18 that we maybe hovering or testing that level couple of times in this calendar, but yes, the trend is definitely upward. However, there is pain in shorter term and one has to grin and bear it.
Shenoy also informed that he will be betting on largecap stocks.
Below is the verbatim transcript of his interview to CNBC-TV18
Q: Let us go into the technicals of the market which has taken it down so badly, talk of one operator or two having serious financial problems and that is why the technical pain in the market. Do you think this is going to prevail for a goodish bit of time - the decimation of the midcaps and the consequent pain that a lot of operators would have gone through?
A: Looking at the movements in some of the stocks, one can definitely make out where institutional interest was not there and that the quality of the stocks were of a suspect or maybe of suspect quality. So, somewhere, there one will not find the next round of bias coming in even if a stock loses 20-25-30 or maybe 60 percent as it has happened.
So, unless there is an intrinsic quality in the stock whosoever exits, unless the next round of buyers comes and buyers in this kind of market come only when there is a value for money proposition. So, quite a few of the stocks have corrected for multiple reasons, which we can always argue about.
However, unless there is some kind of a quality, one is not going to see bias coming in. So, this is a good hunting ground and I think you used the right word, decimation of some of the suspect quality midcap counters. Those who have got really slaughtered are not going to rise in a hurry. However, the good ones definitely I think bias will step in. It’s a question of time.
Q: Yesterday, we saw a massive FII sell figure in the cash market. Yesterday, after the Budget when you would have spoken to your clients - did you get a sense that perhaps they have said enough is enough on India and maybe now it is time to pull out money? If not, at least stop investing.
A: I think it is more because of the multiple factors which were at play yesterday. We had Budget, we had closure of the session and suddenly this Tax Residency Certificate (TRC) came off. Also FII, FDI in some of the sectors which could have been over hang because of clubbing in.
I think multiple factors, when they converge, you have this kind of pressure in the market which could be unnaturally on both sides. Yesterday, it happened to be on the downside. However, if one steps back he can see, the fundamental story of India has not come to an end.
The troubles do exist and they were existing a few months back. They will be existing a few more months down the line. So, whenever one gets somewhere attractive entry point or feels the risk reward return pay off is going to be beneficial, I think most of the investors will enter.
So, the longer term investors are just bidding for the time and waiting on the by lines. What we call the noise traders or the scalpers, I don’t think are going to enter the market in a hurry. So, it is going to be a stayed market for few more days if not few more months. Once the fundamentals get aligned and the March results or the financial year results are out, one could be seeing a second round of interest coming in. That’s where the longer term investors would be coming in and that’s what we are hoping for.
Q: Is there a bottom in place at least for the market? Let’s not look at the midcap side, for the Nifty. Do you think that it doesn’t say for instance go below 5600? Is there a bottom in place because of these macro concerns being addressed?
A: The market always moves on fear and hope. I think yesterday’s fear was overwhelming and few days later hope could be prevailing. So, somewhere in the beginning of the calendar year, we were of the opinion that markets had run ahead of fundamentals and the delivery of numbers would be slightly lower than what the expectations.
It has proved to be true. I think because of markets really now getting a drubbing, most of the analyst’s views would go swing the other way. Now, one could have a lower expectation. By far the indications are that if one goes back to the excel sheets and work it out, the numbers of March maybe slightly better than the lowered expectations because of few days happenings.
So, I think to a large extent 5600, thereabouts one could be having some kind of a safety net emerging. However, the market will have to bide for its time before it really becomes some kind of attractiveness emerges for a longer term investor to come in.
I belong to the hopeful category. So 5600 - thereabouts, I feel market will have a good support. We maybe hovering or testing that level couple of times in this calendar, but yes, the trend is definitely upward. However, the pain in shorter term, one has to grin and bear it.
Q: I can see you are positive on the infrastructure and the capital goods side. Which stocks would you be betting on?
A: I would definitely be extremely watchful and careful on midcaps. I would try to give them a pass because erring on the side of caution is not going to cost anybody any money. I will stick to the largecaps. Safety in size is definitely going to be paramount for next few months.
Q: Any banks that you would like or are you worried about the sector because of whatever cyclical nature of the economy?
A: Unfortunately the advantage what private sector banks have over PSU banks is going to remain, despite all the hoopla what we are seeing. Capitalisation or recapitalisation is going to come, which is not going to be of any fruitful value.
So, like it or not, the corrections which PSU banks have undergone may bring them attractive levels. However, I don’t think there is going to be too much of an investor interest in them. So, it is going to be private sector banks to rule the roost.