Buy now or repent by Diwali '12 when mkt sees new highs

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Buy now or repent by Diwali '12 when mkt sees new highs

Kirti Doshi of Antique Stock Broking suggests investors to start investing and pick stocks in October because the market may complete its downward journey in October. "Earlier bottoms also completed their journey in October," he added.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets

Kirti Doshi, promoter of Antique Stock Broking suggests investors to start investing and pick stocks in October because the market may complete its downward journey in October. "Earlier bottoms also completed their journey in October," he added.

Doshi doesn't expect Nifty to break below 4,700 - 4,750 levels soon. "It may take another months but downside is very limited. If something large happens in the European countries it may lead further fall but would be short lived, the market would again bounce back to above 4,750 levels," he elaborated.

By the end of this year Nifty is expected to cross 5,000 levels. "If commodity and crude prices remain where they are I will not be surprised if the market retests new high by next Diwali," he added.

Also Read: Global markets to tank further in short term says StanChart

Below is the edited transcript of Doshi's interview with CNBC-TV18. Also watch the accompanying video.

Q: What is your sense of how would October shape up for the market because everyone is going in with so much pessimism and expecting the worst?

A: I expect the market to complete its downward journey in this month which started last Diwali (November 5). Earlier bottoms have also nearly completed their journey in October. This is a month where one should start investing, be a bit aggressive and start picking your stocks.

Q: What is the downside risk, is it the 4,300 mark that a lot of traders are priming themselves for or do you think the market actually has the potential to breakdown to 4,000?

A: I don't see market falling down much below 4,700-4,750 levels. It may take another two months but downside is very limited. If something large happens in the European countries it may lead further fall but would be short lived, the market would again bounce back to above 4,750 levels.

Q: On the other hand what is the next upside trigger that this market has? What would be the positive trigger from here on that will help the market get back on to its feet and to the levels that you spoke about?

A: If you one has a look at how things have happened from last November onwards the market is determined by five factors which I put is as "I-C-I-C-I". First 'I' reflects inflation which was highest ever in the month of November-December because of 'C' that is crude and commodity prices. In last February because of Libya Crisis crude surged to USD 125 per barrel in Brent and USD 100 per barrel for NYMEX.

The second 'I' represents interest rates - because of high inflation and high commodity prices RBI has increased interest rates more than six times. That has led to highest ever interest rates of the last two and half years. The second 'C' represents currency. Due to uncertain atmosphere in the domestic and international markets we have not seen large inflows in equities. The dollar strengthening against all the currencies has led rupee to 49-49.50 levels.

The third 'I' represents international market, yesterday and day before yesterday equities in most international markets were trading around the 52 week low. Out of these five factors (I-C-I-C-I), four factors have been taken care; the commodity and crude prices have fallen nearly to a low of the year. The interest rates may top out somewhere and inflation is coming down. Further fall in crude and commodity prices will reflect in inflation within two-three months. We are sure by March inflation will be below 6.5-7%.

Out of these five factors, four are favouring equity investments. The last factor which is international markets, once that stabilises we will see huge inflows and confidence of people reviving in the markets. They will start investing which will lead to bottoming out of the market. We will have much better time than March'09 to November'10. We could see a similar kind of move. I am very bullish and out of these five factors four are in the favour and fifth will also turnout very soon.

Q: What would all of this amount to in terms of Sensex target for you by the end of the year or perhaps by early next year?

A: By this year-end we may cross 5,000 levels. If things civilise and government does some policy changes, infrastructure spending and much awaited GST, DTC then by February we will see 5,200 levels. If commodity and crude prices remain where they are I will not be surprised if the market retests new high by next Diwali.

Q: What are you picking up in terms of flows? Will that put some pressure on the market before it finds its feet or find its bottom as you suggest?

A: Flows can be divided in two parameters; one is international flows and another is domestic flows. The domestic flows are not happening because of much awaited policies on distribution incentives. If P&G , Colgate or HUL  want to sell any of their products, they will have to give some incentives to distributors. We don't have give incentive to distributors to go and sell mutual fund products or ULIPs or PMS schemes. I hope government will give some incentives because that will generate large employment and flows in the equities which we all are waiting for.

In the last 18 months, Indian people have bought more than USD 65 billion of gold. Whenever this gold rush stops and people want to invest their assets somewhere else they might look at the market. If there is proper distribution channel and if they will be incentivised, we will see a much bigger flows in the market. That will strengthen our domestic mutual funds, PMS and ULIPS of insurance companies. We will not have to depend much on international markets. Today we are completely dependent on international markets.

Once the market starts moving towards 5,000 plus on the index, more bullish factors will emerge and money will inflow. I am not worried about international flows - how and when it will flow is all part of the market. When the market goes higher more money comes in.

Q: What do you with a stock like Reliance ? How much do you think it can do for the market?

A: I am not very bearish from this level, Rs 730-750 is a good price to buy Reliance. Once the issue of KG-D6, CAG report clears which may take another two-three months then the stock will perform.