A: I have been reiterating on this show and fortunately I have been right that oil is going to come down. We went through a lot of uncertainty in July with regard to oil because of the Lebanon and Israel crisis, but that seems to be softening now, and everyone is convinced that oil perhaps will even come down below USD 70.

If you look at the movement of the stock market in the last few days, the one over-riding factor has been the fact that there has been a change in valuation because of oil. For the present, we know it is the refining companies that have benefited.

But as you go on, you will perhaps have a more positive call on banks, you will also have a more positive call on auto companies because the cost of funds should come down. And if that happens we are in for a good ride in the market. Of course it is not going to happen today or tomorrow but can happen over a period of time.

Q: Aside from crude what has changed the sentiment, because that participation does not seem to show up, atleast in the volumes everyday?

A: Performing markets normally tend to bring in more participants and that is  happening in a trickle effect this month with the retail market, with traders and even the FII flows. If we believe, and ofcourse perhaps we have evidence to show that when interest rates go up and money markets get tight, then the tap, which is for allocation towards equities turns down.

Then we should believe that the converse is also true, and even though we may be in a period of fair valuation, and perhaps any large movement from here will lead to over valuation, it is just impossible to evade. But it is right that volumes remain a concern and that is because I think people still don’t have confidence in the market.

Q: One word on how you are approaching the entire metal space, whether it is the ferrous or the non-ferrous lot?

A: Caution.

A: No. I think aluminum is doing better now, and so is copper, but steel is something that is still not giving us any comfort of direction. I don’t think we have any major cause for concern in terms of a huge deviation in the prices of steel, but definitely it is not going to show you major upsides.

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