5400 may be little more optimistic in short-run: Dilip Bhat

In an interview to CNBC-TV18, he says may be some of the noises that are being made on GAAR or may be incentivizing on mutual funds in order to ensure there is more inflow into the system, or may be some news coming out of EU could possibly see that the market is ready to go up by another 100-150 points on the Nifty. So that looks very much on the cards possibly in the short run.

But the larger picture still remains very apprehensive. In the larger picture, things are slowly but surely moving towards a disorder which can be disruptive. So may be Greece has dodged a bullet by electing a pro bailout government but the larger structural weakness still has to be played out. Even in India, some of those things in terms of the GDP growth still remain apprehensive.

“The dilemma always remains whether the larger picture will really intervene in the short-term rally. My own sense is there is going to be a short-term rally but on the larger picture, the market will be heading southwards,” says Bhat.

Below is an edited transcript of his interview. Watch the accompanying video for more.

Q: If there is a combination of local and global triggers now, do you think it will be only a 100-150 points or could it be a more substantial rally in July?

A: If one has to be a little more optimistic may be a 5400-5450 could be the region. But none of those things really gives a sustainable kind of confidence to push past that particular mark because there can be noises but there has to be actual adequate action to gain some visibility that the GDP is going to revive.

Unless and until that doesn’t revive, what will really happen is we will see a very anemic and corporate earnings growth. I don’t think that will inspire the market to rally on a sustainable basis. I think 5,400 could be a little more optimistic in the shorter run.

Q: What have you been picking up in terms of fund interest? Do you get the sense that people were waiting in order to hear something from this global event and then take a money decision on India?

A: I don’t think people were very keen though they were expecting that some kind of reforms probably could trigger some kind of buying. By and large I think FII investors still remain very apprehensive, very circumspect. It’s not much to do with what's happening worldwide but internally in India itself, a fiscal deficit of 5.1% doesn’t cut ice with anybody, least of all with FIIs.

So that remains a top most worry. To compound matters, if growth really slips down to 5-6%, that will only make matters worse. That being the scenario, I think they don’t seem to be too much in a hurry or too eager to rush and buy into stocks.

Q: Would you concur that this is a hope phase that the market is going through which can lift the Nifty in the near-term and eventually macro and fundamental headwinds will peg it back again?

A: Very much. This elusive rally which all of us were talking about probably seems to be in the making at the moment. There seem to be concerted kind of events which are taking place which possibly will lift the Nifty up. But as you very rightly put it, I think the headwinds will probably make it much more sober and I don’t think there will be a runaway rise.

Q: How would you approach? Is this the opportunity to start booking out? Would you read it as another very short lived rally or do you think there is something more durable in what happens in the second half in terms of a pullback for the market?

A: Very frankly, if I was a short-term trader, yes, I would like to gradually sell on the rallies with an upward target may be of 5,400 on the Nifty. If I were a long-term investor what I would really do is maybe I would do an SIP, spread out over the next 12-15 months because I really think that the market can make a very serious correction from the current levels on a longer-term basis. Maybe if I am wrong, I don’t want to miss out on the opportunity. So an SIP approach over 12-15 months would be a much more prudent and cautious approach.