SENSEX NIFTY
Dec 06, 2012, 02.54 PM IST | Source: CNBC-TV18

See mild gains in Dec; FII selling in Jan: M Stanley PMW

Gaurav Doshi, VP - PMS, Morgan Stanley PWM expects market to close flat to positive in the month of December.

Gaurav Doshi, VP - PMS, Morgan Stanley PWM expects market to close flat to positive in the month of December. However, he says there is a stronger possibility that the action will get narrowed towards cyclical stocks in the broader midcap market.

"In the second half of this month, you will see FII and institutional activity diminish purely because of seasonal factors such as Christmas and holidays. So I would think that you will have more domestic movement that will drive markets, which will restrict movement to a fewer sectors and the broader midcap market," he told CNBC-TV18 in an interview.

"I would say that rather than look at the broader Nifty right now I think there are much more and better opportunities in individual stocks and sectors," Doshi says.

Below is an edited transcript of Doshi's interview on CNBC-TV18.

Q: What is your sense of what lies ahead for the rest of December given the kind of political and global cues that you are expecting?

A: There is a strong possibility that you will get a flat to positive close at least in the month of December. Liquidity has been good, and more importantly, historically, December is a month when equity markets tend to give positive returns. In the last 20 years, you only had four times where the month of December has not given mildly positive to strongly positive returns. So I would say the odds are stacked in favour of the market continuing with this momentum—maybe not at the same pace but in the same direction towards the end of this month.

Having said that, I think there is a stronger possibility the action will get narrowed towards cyclical stocks in the broader midcap markets because towards the second half of this month, you will see FII and institutional activity diminish purely because of seasonal factors such as Christmas and holidays. So I would think that you will have more domestic movement that will drive markets, which will restrict movement to a fewer sectors and the broader midcap market.

Q: Would you say the best for the index is behind it or do we still have a shorter closing this year up at 6000?

A: To put a number right now is anyone’s guess; but the momentum is there. I think 6000 is within the reach. There are talks of 6100, 6200, 6300—whether it is in December or in January is going to be a hard call to take. I think what happens politically with regards to the reforms on National Investment Board (NIB) etc, will determine whether we get that extra 100 points odd on the Nifty or not. But I would say that rather than look at the broader Nifty right now I think there are much more and better opportunities in individual stocks and sectors.

Q: What are your expectations from Parliament and policy through the next couple of weeks?

A: Expectations are obviously there. Everyone is hopeful. You can see that on the prices in the screen. Everyone is hopeful not only about policy, but even eventually from the RBI. But I think what is more important then is the pace at which these reforms progress. While we know the intention is good and the ramifications of these policy actions will be extremely positive, what is really critical is that the pace at which these policies progress and these reforms materialize. Having said that I think sentimentally what we are seeing with regards to Foreign direct investment (FDI) is a step in the right direction, but with regards to Goods and Services Tax (GST), NIB we need to see more concrete and faster paced action and if that plays out then we will definitely see some sort of valid sector rotation taking place which in turn will provide a sustainable base for the market to build a higher base on.

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