Best of rally over; mkts enter choppy phase: Justin Harper

"As we move into Q4, there will be a calming down of markets . There will be lack of any sort of catalysts going forward," he added. According to him, the markets have seen their peak and the best of the rally is over.

Meanwhile, Harper sees further rise in prices of commodities including gold and crude oil, so he wouldn’t sell commodities anytime soon. 

Below is the edited transcript of Harper’s interview with CNBC-TV18.

Q: Just give us a sense in terms of the next amount of cues that you will be watching out for in terms of significant triggers possibly for the US markets as well as the European markets?

A: We are getting into a period of stability and possibly more of choppy markets given how eventful it has been in September. As we move into Q4, there will be a calming down of markets. There will be lack of any sort of catalysts going forward. We are expecting to see some sort of sideways trading.

It is just for people to see what the effects of QE3 will be how the eurozone moves on from the bond buying and in Asia, China and Japan what they plan to do regarding further stimulus. It is sort of betting down what’s happened before and looking now what’s the next driving force. No one can say what that is at this stage.

Q: Would you see significant downsides? It’s one thing for Draghi to promise that he is protecting the bottom and ensuring that he will do everything and also getting the mandate to buy bonds, but that gets triggered only if the political peace is in place which doesn’t appear to be. Is it that we are now coming to the hard political bargaining within every national boundary? We know from India’s experience itself that’s always very difficult to sell to a population. Is there a big downside?

A: Definitely, there is more downside versus upside, because a lot of upsides have now come through to what the Fed have done, the ECB, PBOC and also Bank of Japan, central banks’ concerted effort has now gone. They have laid their cards on the table. We are now left with problems that haven’t been solved by those actions.

There would be Spain going to the ECB for a bailout. There would be Greece still tethering with the fact that it might exit and the worries of a slowdown in China. We have still got a lot of negativity out there and that’s why we are seeing some of the markets take a little bit of cream off the top because of those downside fears.

Q: Where do you cream off first? Which asset classes? Will it just cream off in Europe and maybe US market equities or all risk assets which means say the Asian equity markets, emerging market equities, emerging market currencies?

A: You start with equities and look at the US and the fact that unemployment is still well above 8%. We are still waiting for QE3 to come through. I wouldn’t be selling out commodities anytime soon, because I still see further growth for gold, oil and other commodities. So equities first, commodities and then currencies depending on which pair you are looking at whether it’s US dollar against Yen. You got to look at it on a tier system.