Sensex to hit 18k in next couple of months: DSP ML

Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS FII's pump in nearly $ 4 bn in last 5 days Biggest contributors in 17K journey US economy could spring upward surprise Experts still bullish, as Sensex hits all-time high ALSO READ See what other FIIs are saying about the markets See what other experts are saying about markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

Andrew Holland Of DSP Merrill Lynch said that the Sensex is likely to hit 18,000 in the next couple of months. He added that India is benefiting from higher hedge fund risk appetite. Holland is however, not bullish on technology.

 

Excerpts from CNBC-TV18's exclusive interview with Andrew Holland:

Q: You have been cautious on this market for a while, but what have you made of this huge pace with which we have moved not just to 16,000 but now beyond that to 17,000?

A: It has been a fantastic week so far. If you remember last Friday, I was asked if the markets could go to 18,000 in the next two months and I said it is very doable. We have seen FIIs pumping over USD 3 billion last week into Indian equities.

I think this is a result of two things. One the credit markets are slowly starting to recover and secondly risk appetite has started to come a little bit more back on to the table. So, India and a lot of the emerging markets are benefiting from increased risk taking by hedge funds and other investors.

There are also some roadblocks ahead. The US is slowing quite quickly. But at the moment, bad news in the US is not leading to market falls and as long as that is the sign, that would mean that investors are back in the market and looking ahead.

 

Q: Would some of that risk appetite trickle down to sectors that have underperformed, IT for instance or do you think they are going to be laggards even in the run-up to 18,000 from here?

 

A: With technology stocks, I think basically there are going to be near-term problems for them, which they will have to address going forward. But if the rupee was to kind of depreciate a little bit, then obviously we will see a relief rally. But I still think that technology has a few more issues going forward, mainly a slowdown in the US and how that might affect earnings and pricing going forward.

Q: Who do you think are going to be the leaders from here?

A: I think the leaders will continue to be the large cap stocks. We are back now where investors will look very carefully at some of the kind of midcap names, which are in industries where you can see very strong growth. So, I don't think we are going to see particular leaders going forward. Reliance pack has been the leader so far. But I think it will be large caps now in particular.