Mar 30, 2012, 10.56 PM | Source: CNBC-TV18
Mehraboon Irani, Nirmal Bang Securities expects a pleasant surprise for the market in April.
Mehraboon Irani (more)
Head -PCG, Nirmal Bang | Capital Expertise: Equity - Fundamental ,IPO
He expects a pleasant surprise for the market in April. “We will have to watch the global liquidity flows. I believe that can possibly help us having a positive surprise as far as equity market goes because there will be a lot of liquidity around which is yet to be parked. If we have a stimulus coming from US also in June-July, which I think the chances would be 50% right now, we could be having much higher levels,” he asserts.
Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video.
Q: We put behind a tough series, the March series was quite tough and uneventful for us. How do you think the April series is going to pan out for us, especially with April 17 round the corner?
A: I would put it in this way. In the second or third week of December, we were hovering at around 4,600-4,700 on the Nifty. Quite a few of us were saying that possibly we could even go below 4,000 on the Nifty. From there we have moved up nearly 15%-17% and many frontline stocks have gone up 30%.
On a fundamental basis, if you see what has happened, nothing much has happened. In fact quite a few negative things have happened. The expectations of election verdict went against the market consensus. Budget, too many things were expected, nothing much happened.
If you look at the negatives, the coalition politics is still hurting corporate India. Back tracking of reforms continues. Railway Budget is a classic example. Spiraling crude prices, inflation at elevated levels, government borrowings leading to an unpleasant surprise, bond yields unreasonably high, rupee under pressure. These are the problems within this country. What has the Budget done? According to me, the Budget is a wonderful exercise for government in increasing revenues. Besides that, honestly it doesn’t do anything much for the stock market. In this circumstance, we have gone up nearly 12-13-14%. We are still sustaining at that level. That clearly means the market has been driven only by one factor and that is global liquidity.
What happens in April? I would like to be an optimistic and believe that the liquidity will continue to possibly try riskier assets like equities and not India alone, across the world. Therefore, possible there could be a pleasant surprise for the market. But fundamentally we remain on a weak wicket. Whether ignoring fundamentals I should remain invested in the market and go on buying. It is a difficult call on the street. But I strongly believer and I always stated that you should invest in equities. There should be stock specific approach, look in for companies which have a decent business model, cash in the books are not going to be too much affected by a hike in excise duty or a hike in service tax. Demand is not going to be affected. Go in for those companies across those sectors.
We have to keep our fingers crosses and see what the RBI does next month. I won’t envy the RBI right now. It is at a very difficult situation. Point two, we will have to watch the global liquidity flows. I believe that can possibly help us having a positive surprise as far as equity market goes because there will be a lot of liquidity around which is yet to be parked. If we have a stimulus coming from US also in June-July, which I think the chances would be 50% right now, we could be having much higher levels which fundamentals honestly don’t justify.
For complete interview, watch the video.