Oct 16, 2012, 01.10 PM IST | Source: CNBC-TV18

See Nifty at 6K by yr-end; expect 25bps rate cut: Ambit Cap

The Indian market rally seem to have taken a pause and Andrew Holland of Ambit Capital feels it is just a temporary phase before the market again starts moving upward. He is hopeful of seeing the Nifty around 6,000 by the end of the year.

Andrew Holland

CEO (Equities), Ambit Investment

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The Indian market rally seem to have taken a pause and Andrew Holland of Ambit Capital feels it is just a temporary phase before the market again starts moving upward. He is hopeful of seeing the Nifty around 6,000 by the end of the year and 6,400 by October 2013. Besides, Holland believes lower interest rates and earnings growth to support market in 2013.

Holland further stated that global markets are awaiting cues from the new leadership in China and he does not expect the Indian market to be influenced much by the US Presidential elections. At the moment, investors can continue to accumulate quality cyclicals at lower levels, advised Holland.

As far as the RBI's rate cut decision in its October 30 monetary policy meet is concerned, Holland thinks the central bank would ideally want to see more action on the fiscal side. He also anticipates a 25bps rate cut.

Also read: Nifty may see 6000-6100 in Nov series: Angel Broking

Here is the edited transcript of the interview on CNBC-TV18.

Q: Do you think the best of this rally is behind us or is this merely a pause before the market takes off again?

A: I should think this is a pause and we had some great news over the late summer months, not just from India in terms of reforms but also from the European Union and the Federal Reserve (Fed). It is all very supportive. I think we got a little used to reforms every week or expecting reforms every week.

We are back to fundamentals and the result season. That is keeping us a little occupied. There is nothing new that is coming out of the global economy at the moment, if anything the situation in Europe is still confusing.

What will propel the market to say 6000 on Nifty? One of the events that I am looking at very closely and this is a key not just for India, but for global markets is what happens in China when the new leadership takes over in November. My bet is this is once in a decade kind of change. They will come out with some form of stimulus package. Though, I'm not quite sure what but, that will help global markets because what we have is expectations that China getting back on the growth track for 2013 will help the global economy.

The US is already showing signs that it is coming through slowly in terms of its recovery and that could have fund managers around the world chasing the year end performance. That would be the event I am looking for, which will help global markets as well as India and probably get us that 6000 on the Nifty.

Q: By when? Do you think it could be a surge into Diwali or do you think it might be a year end kind of an event, the levels you are talking about?

A: It depends. The leadership in China takes over in November. It could be a post-Diwali event and towards the year end I am seeing this kind of a big rise.

Q: In the interim, do you see this pause just being a sideways kind of a few weeks in the market or do you see the possibility of a retracement?

A: No, I don't think that we are going to see a big retracement. October has been synonymous for Black Swan events over the years. Unless something comes out of Europe, which we have all missed, then I think markets globally are just consolidating going through results season which is probably not so great globally and here. There are a lot of pressures.

I think everyone is listening to the body language of companies and how they are looking at the balance of the year and also 2013. So far so good from what we have been seeing. When we got to 5700 on the events which unfolded in early September our view was that we are probably done for the time being. It will take a China event to propel the markets further ahead. A consolidation for me is no bad thing given the strong run we have had not just in India but globally.

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