60-70% chance of mkts going down from here: Andrew Holland

He sees no catalyst for markets to go up from here. The Nifty has been stuck in a 150 point range for the last few days on valuation concerns and lacklustre global cues.

Speaking on global cues, he sees a likelihood of a hung Parliament in the UK election next month.

Here is a verbatim transcript of his exclusive interview on CNBC-TV18. Also see the accompanying video.

Q: How are you feeling about global equities now? They have been remarkably resilient despite some adverse news flows over the last month or so?

A: I have come to a conclusion that the markets just continues to rise on liquidity and fears have been taken away from the market. Now, it doesn’t matter what happens, there is someone there to bail you out and that is what we are working on. Probably, there is no fear in the markets. Whatever bad news is there, it doesn’t seem to have an impact, and that is concerning me.

It is increasingly likely now that interest rates in the Western world are not going to move much higher this year. Therefore, liquidity remains key. There is something developing which will turn out to be quite nasty maybe in 2011. I think we will start worrying about this more and more.

A key event to look out for in the US is the tax relief for buying new homes that comes into effect at the end of this month. It would be interesting to see how new homes sales start to pick up going forward as that would give a better indication of how strong the US economy is or isn’t, when there is no stimulus package. This is something which will develop over the summer months.

We have got the UK election, where it’s looking more and more like a hung Parliament. We also have to wait and see how much the International Monetary Fund wants to extract from Greece before giving them any loan.

All of these are known in the market, but we just ignore them and continue to see markets trading higher because liquidity is in abundance. What happens when this liquidity moves out? It doesn’t look as though it is going to happen soon.

We seem to have had this sideways market in India for over a year, but I am sure it is six months. So; it is either going to go up or down from here. There is a 60% chance that it will go down from here rather than up. In the past too, whenever the market has gone towards 18,000, it has retraced.

I am negative in the shorter-term and would look to again see it retrace back towards 15,000-16,000 levels. Only then will I start buying again. That is unfortunately the kind of trading range we see for this year. It is stock pickers market and you have pick out your sectors and stocks very carefully.