Current rally should sustain for some more time: IIFL

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The investor interest is high after the recent outperformance by India, says Aniruddha Dange of IIFL. Indian equities have been on a roll since day one of 2012, notwithstanding minor corrections here and there.

According to Dange, any further upmove from here will be driven by fundamental newsflow.  "At this point, the rally looks like it is going to sustain for some more time. It will be more stock-specific and in things have shown some improvement," he believes.

Below is an edited transcript of Dange's interview on CNBC-TV18. Also watch the accompanying videos.

Q: A word on the gathering you have seen at your conference today?

A: This has been a very good turnout. I think we have over 600 investors registered for the conference, which is pretty high. The interest has gone up for India given that it is one of the best performing markets in the world, especially in dollar terms.

I think people are looking for confirmations or some indications of whether the rally will sustain or not from hereon.

Q: What do you sense among the investors who are attending? Is there a sense of confidence post the rally or is it a sense of surprise?

A: People have been taken aback by the rally. No one was expecting this kind of a performance, especially in India. There was a complete sense of despondency in December and probably around maybe January 15 or 20, when India continued to perform and currency also started appreciating, that is when people realised that it is going to last for sometime.

That is where the shorts got covered and people took long position on heavily oversold names, especially in infrastructure. So people were not confident of the rally in the beginning but slowly the confidence is increasing. At this point of time, most people have assumed that the rally might sustain for some more time, but they are looking for some improvement in fundamentals on the ground, from policy perspective and from earnings perspective.

If you see the result season, many sectors have disappointed. It's not that the result season has been great and therefore these stocks have performed. We have not shown any significant improvement in fundamentals. The stocks where outlook is improving can fairly do well.

Q: What is your sense of what lies ahead for the rest of the year after putting in such a strong performance in the first five weeks?

A: It is very difficult to say how it is going to pan out because we were not expecting this kind of a rally in India. But it's a global rally, I mean India is up same as Argentina same as Brazil and many other global markets in the world are up this year. So, this global phenomenon it's not an India-specific phenomenon and that is the reason why it will not be so easy to say that how the second half is going to pan out.

The key to remember in this rally is that this will be something, which we have to keep a watch on continuously and watch out for basically accidents globally because its global money that has come in. We have to watch out for accidents and till that time the rally is likely to sustain. That is the way I would put at it.

Ex post facto, we will come to know whether the rally was sustainable or not but at this point, the rally looks like it is going to sustain for some more time. It will be more stock-specific and in things have shown some improvement.

Q: Does it look like this market has the potential to get itself to a new high or is the approach still tactical where you get big rallies then retracements?

A: Again a very difficult question to answer. I think basically there is liquidity in the world. It is clear that US has said that indices are going to remain low till 2014. European interest rates are low. Overall, there is liquidity in the system; sovereign funds are buyers because oil prices have remained high.

There is liquidity in the system and liquidity-driven rallies can be fairly sharp and can sustain for much longer as we have seen historically. So, probably unless there is an accident this rally is going to sustain.