Budget, Q3 results will be next triggers: Raamdeo Agrawal

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Raamdeo Agrawal of Motilal Oswal Securities expects some discomfort in the market at 14000 levels. According to him, the budget and quarterly results would be the next trigger.

He believes that presently, the conviction is low on underlying fundamentals. He further adds that he is positive on sectors, such as capital goods, power, cement, steel and infrastructure.

Experpts from CNBC-TV18's exclusive interview with Raamdeo Agrawal:

 

Q: How are you feeling about this past week or so and how much volatility has crept into the market?

 

A: I think last week's entire volatility started with CRR and then it was just about recovering at the same pace or maybe even faster pace. I think that we have reached to a level of 14,000 where people are uncomfortable and whenever a small thing happens, you have ticket size of 500 points.

 

So I think that shows that there is some level of discomfort in the current levels of the market and the next quarterly results is the best guide to what is going to happen from here onwards in the market.

 

Q: What is your sense of where this market is headed next? Do you expect significant correction before things peak up once again, is that the feeling you are getting?

 

A: No, I am not getting that sense that there is any problem in the market, but the level of volatility is such that for very small things, you have disproportionate fall here. So people are at the edge to sell or book their profits. They do not have conviction in the underlying story where it comes to the projections Rs 700 EPS this year and Rs 850-870 next year or so.

 

So having seen the recovery from 9,000 to 14,000, I think there is some sense in the markets that people are awaiting the quarterly results to affirm that corporate action in India is on track. Mr Chidamabaram's budget is also highly awaited.

 

So I think that these are the things which are going to move the market significantly from here to the next level. Before that I think it is going to be tough on kind of discomfort, which I see with the players. The reason could be Thai bhat, the CRR cut, or whatever else, but there is some level of discomfort at this level.

 

Q: What about real estate now? Sobha Developers listed today, there was a huge amount of interest when the IPO happened. What is your take on where this space is moving and this one in particular and how it will list today?

A: I do not know about the premiums and what is going on. I believe that it is a very good company and it has a blue chip clientele. While it is an extremely well managed company, at the same time, what is happening in the market place today is that whenever the stock gets listed that seems to be the highest price and after that you see continuous correction. So I do not have any clue to at what price it will list at this juncture.

Q: Aside from sentiment being edgy, do you sense any internal problems in the market, in terms of leveraging or positions building up or anything else?

A: If you look at it, things are very well within control and particularly after that May-June debacle, I think that a lot of guys suffered in that particular fall and after that, I do not think that the same kind of craziness is there in the marketplace in retail. Retail is very cautious and very calibrated and I think they can manage the risks they take very well.

So in this kind of market, there is always some kind of froth. I am very clear that if you cannot take 20-25% decline from the current levels, please do not come to this market because now it is really serious game at this level and the climb will be there and the market will go to higher levels but it will not be for fainthearted people who on every 500 points starts asking whether markets are now peaked out or things like that.