Bear mkt rally may take Nifty to 5500: Prabhudas Lilladher

The Indian market has seen a strong rally over the last few sessions. In an interview to CNBC-TV18, Dilip Bhat, joint MD, Prabhudas Lilladher says, for the market to sustain rally and go forward, some game changing policies and measures by the government are required. “Unless and until that happens, we probably will continue to see the bear market rallies maybe up to 5,300 and if there is more of tailwind, maybe 5,500,” he adds.

A lot of key events are stacked up over the next one week. Bhat says, everybody is closely watching Greek elections and the RBI’s statement. “How much of rate cut the RBI does in this particular policy probably may not be all that material, but what it says will be very keenly watched and observed by a lot of people,” he asserts.

Also read: See Nifty in 5000-5200 range for next few days, says Udayan

Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: Everyone is clamoring for some rate action. What do you expect to see from the RBI? Do you think it might have a big impact on the market or is it in the price already?

A: I think a lot of expectation has already been built up. It is already there in the price to some extent. I think it is more important to know what RBI is going to talk about its subsequent actions, what are its intentions and how does it see the inflation and the economy going forward.

How much of rate cut the RBI does in this particular policy probably may not be all that material, but what it says will be very keenly and closely watched and observed by a lot of people. That, to some extent, will determine whether this loosening monetary policy and the lowering of interest rates will set the tone for the economy.

Q: Is that the main trigger which the market is focused on at this point or do you think next week global events might also have a big role to play, post the Greek election result on Sunday?

A: You are perfectly right. I think this is just one of the things, everybody is very closely going to watch how the Greek election is going to play out, whether the QE (Quantitative easing) in US is also going to happen because that also is going to be very important. Last time around, when this happened, we saw good amount of rally in the markets. Also, one is keenly watching whether the LTRO (long-term refinancing operations) in Europe is going to happen. Both put together can really swamp the equity markets with a lot of liquidity.

So, all those things probably will play a lot more crucial role in the coming days and weeks. Probably that will provide a good amount of rallies, which the market has been awaiting for quite some time, in case, if it turns out to be favorable. But for the market to really sustain rally and go forward, you require some game changing policies and measures by the government and maybe something happening abroad. And unless and until that happens, we probably will continue to see the bear market rallies maybe up to 5,300 and if there is more of tailwind, maybe 5,500.