In an interview to CNBC-TV18, Udayan Mukherjee said that there is tremendous momentum in the market right now and one has learned over the years never to question momentum in the market.
He further said that there are handful of sectors where one can find value.
Below is the verbatim transcript of the interview:
Anuj: We are staring are 10,000 right now. What is next?
A: It is impossible to predict this market. At 9,500 all of us were talking about the prospect of a consolidation and some kind of a correction and the breakout has been on the opposite side. So there is tremendous momentum in the market right now and one has learned over the years never to question momentum in the market; whatever valuations might be telling you, but the last bit of this rally is scaring me a bit, I must confess because it is not backed by earnings, there is an element of a blowout which was not there in previous legs of this rally. So the Nifty certainly looks like it might be headed to 10,000 plus and well above Rs 10,000 in the near term the way the momentum indicators are but I think it is getting to that point where - even people who respect momentum in the market would be scratching their heads and saying is it too much of a good thing. So I do not know when this momentum stops maybe we get carried another 4-5 percent on the way up because of the fresh breakout we have seen above 9,500-9,700 but at this point you should start to get more and more cautious and less exuberant because there are signs of a mild bit of madness creeping in.
Latha: The market can remain exuberant for a longish bit, can't it?
A: Of course and we all know that and that is why preface everything that I said by saying that you never question momentum in the market. In the near term the market has a different logic of its own, so you can post facto justify the run-up, the valuation, the correction everything but near term you do not want to stand in the front of the market and saying this much and no further. Chances are that you will be wrong. So when all these words of caution turn out to be correct is anybody's guess and therefore my call is not that the market starts correcting today. Since everything is so rah-rah right now, it is important to go against the grain of the current optimism some times and just inject a little word of caution because sometimes corrections can also make you look quite flat faced and ugly.
Latha: What should investors do? Just stick is marquee names?
A: It is a tough one, what are marquee names; if it's in IT and pharmaceutical and probably not. So I do not know but you are right in pointing out that right now maybe little bit of safety under the belt may not be such a bad thing. If and when a correction happens maybe it will affect some of these frothy midcaps more but who knows, this rally maybe different and maybe midcaps continue their outperformance. These are very difficult to call. I would say at this point in time, as a lot of people have participated through the systematic investment plan (SIP) kind of route, you probably just keep on doing that without second guessing corrections but I think fresh commitments on direct stock level - it seems more and more difficult with every passing day to justify a purchase decision on practically any stock in the market. There are handful of sectors where you can find value but the reasons not to buy those sectors are probably more compelling than the valuations themselves.For entire interview, watch accompanying video.