Speaking to CNBC-TV18, Kunj Bansal, chief investment officer, Sanlam says that the implications of these reforms will come in later than what should and could have been. However, any more government action could give a short-term trigger to the market, he adds.
The government's last-ditch effort to pass long pending bills comes in too little and too late, says Kunj Bansal, chief investment officer, Sanlam.
Speaking to CNBC-TV18, Bansal says that the implications of these reforms will come in later than what should and could have been. However, any more government action could give a short-term trigger to the market, he adds.
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Bansal, however, remains bullish on the Indian equity market and says he is not buying into the market for now as it is too volatile. He adds that investors should be focusing on fundamentally strong sectors like IT, pharma, FMCG for now.
"In terms of buying, my focus would continue to be on the stocks which are likely to continue to perform fundamentally well. IT, pharmaceuticals, fast moving consumer goods (FMCG) are sectors which have good fundamentals and not so comfortable valuations," he adds.
Below is the edited transcript of Bansal's interview to CNBC-TV18.
Q: Yesterday there was a lot of buoyancy in the market because of Dr. Rajan's first day and the policy measures that he made but will you take some concrete buy calls at this point in time or will you hold fire until the Fed policy takes place to decide which way liquidity is heading?
A: The one word for this question is no. This is too dramatic, if I may use that word in a volatile market for anybody to take a call. Of course one also has to decide whether one is taking a short-term call or a medium-term or long-term call.
For traders giving short-term calls, this market is too volatile to be able to make money. If they can, it is very good. For medium and long-term investors there have been good opportunities in the past and there will be more.
One has to decide whether he/she is changing views or sentiment based on the index movement or is it vice-versa. In the last three days, the Nifty came up from 5,300 to close to 5,600 and now we have started looking for reasons to be positive in the market or reasons for India as a country or as an economy to do well. We were doing the reverse till about three-four days back.
Q: I noted that you were cautious about getting into any positions now ahead of tapering but would some specific event from the central government cheer you up for instance if we were to hear a brave diesel price hike at the end of parliament session today or over the weekend will that be a target enough to want you to go long on hopes that the government means business on cutting deficit?
A: The government will indeed take some strong administrative measures to the extent it is possible within its powers post the parliament session. Those certainly could be a short-term trigger for the market. But if I look at it from the slightly expanded timeframe, then I don’t know if I could summarise it as 'too little and too late' as the impact of all these measures that the government has been trying to take in last few months will take time to come.
We have already lost out on a lot which could have been done earlier and as a result it could have been a smoother flow for the economy. But yes, those will indeed be a short-term trigger and I am quite hopeful and positive that those will indeed be taken as well.
Q: Do you think this rally has more legs. What would you be buying?
A: In the short-term, the upward movement could continue but let us keep in mind that we are about 5 percent odd up from the recent bottom that we touched. For any short-term rally, that is more than a reasonable movement to top it out and maybe for the correction to start.
In terms of buying, my focus would continue to be on the stocks which are likely to continue to perform fundamentally well. They will continue to come from sectors like IT, pharmaceuticals, fast moving consumer goods (FMCG). So, these will be more of sectors which have good fundamentals and not so comfortable valuations.
Among expectedly good fundamentals or turning around fundamentals and relatively better valuations, I would look at stocks from sectors like automobile and from the oil and gas sector.