More chances of 10% dip than rally for Sensex: Ambit

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The markets have hit a state of redundancy after the post-Budget fillip witnessed in the week following the mega event.

Andrew Holland Chief Executive Officer of Institutional Equities and Equity Proprietary Trading at Ambit Capital feels that there were more chances of a 10% fall than rally for the 30-share Sensex of the Bombay Stock Exchange. "Valuations remain challenging. There is no real incremental secondary market flows to support the markets. Also there are no earning upgrades likely," he said adding, downside in India was capped at 10%.

Here is a verbatim transcript of the exclusive interview with Andrew Holland on CNBC-TV18. Also watch the accompanying video.

Q: Any thoughts on NMDC FPO (follow-on public offer) and how that might go?

A: I think you just need to look at some of the government issues recently, NTPC is below the price. I just don't think foreign investors that we speak to are overly excited about even with discounts. You can buy Sesa Goa probably cheaper probably if you want the exposure.

I don't find the pricing so attractive for the big government issues and I don't know why that is. When you see albeit a lot smaller companies, you have seen some successful issues out there. I don't know why FIIs are not buying into this. They either fear that the auctions or the way it is being conducted is not working for them.

Q: So you don't buy the logic that is thrown around that NMDC is very different from other iron ore companies across the world like Rio Tinto, and the fact that it deserves several times the valuation multiple that those companies coming at?

A: You could make that argument for India Inc and say that it is a fast growing developing economy and therefore it deserves premiums against anything else in the world. But Rio Tinto is a much different company and much diversified as well, so I don't think you can really compare. It's nice to try and do so, but I think you have to look closer to home. I would say Sesa Goa is equally not more attractive at this point of time.

Q: We had a clean run after the Budget and now we are sort of just holding at the 5,100 mark, do you sense that momentum is pushing towards the upside though?

A: I think we are in this holding pattern only because global markets are holding up themselves. There is lot of problem simmering below the surface, we are trying to push them down and trying to forget them. Though Greece has moved away through some of those problems, but you still have got the other European countries and you still have the UK elections. I think that is where the risk is all focused as we get towards May.

I had said before that this first half is going to be more volatile with market probably looking to trade down in the short-term. Those were the buying opportunities when the market got below 16,000, I became more bullish. At 17,000 for the Sensex, I think its fair value I don't need to chase it and that is where we really are, it's going to be a stock pickers market any way this year.