Bull run in gold over unless Fed resorts to QE3: IL&FS

The BSE benchmark Sensex continued its gaining streak for the third straight day on Thursday and was trading over 100 points up in morning trade amid a firming trend in Asian region.

According to Kapoor, a diesel price hike may lead to a temporary up move in the market. However, he says, the market will need more concrete reforms for any sustainable rally. He sees low probability of market breaching 2012 lows.

"I would advise deploying capital at around 5,000 levels on the Nifty," he told CNBC-TV18 in an interview.

Commenting sector-specific, Kapoor says, he is not bullish on autos on account of weak demand. "The deficient monsoon will weigh on consumer staples," he adds.  

Meanwhile, India's gold imports fell by more than a half in the June quarter and could slide by a third in the next three months as prices inflated by a weak rupee and a 4% import duty encourage traders to use scrap, a Reuters poll showed.

India was the world's biggest gold buyer last year but imports have weakened in 2012, in line with government expectations, after import duties were hiked in March. Stronger global prices, and a weaker rupee compared to the US dollar, have also increased buyers' costs.

Kapoor says the bull run in gold is behind us, unless the Federal Reserve resorts to QE3.

Below is the edited transcript of the interview.

Q: Are you feeling bullish or bearish on the market from hereon?

A: I think we are still stuck in a range. We had been advocating this range of 5,000 to 5,400. The markets stopped at 5,350 last time and it went up. There are still a lot of unresolved issues, which will prevent the market from breaking out of this range on the upside, at least for the time being.

Of course, one of the biggest factors is the monsoon. The rains are even more crucial this year than normal because of the fact that the economy is already in a slowdown. We still have about 25% deficit in the monsoon with 40% of the season gone.

That is something which is a big headwind going forward apart from the other headwinds such as government reforms which had been spoken about by everybody.