Invest in rate sensitives with one-yr horizon: PN Vijay

Q: How are you reading this for the moment? Is it just a bout of profit taking after a heady rally or anything more than that?

A: As of now it looks definitely like strong profit taking because the shares that went down sharply - the banks and to some extent real estate, have seen humongous rise. The market itself has risen more than 20% and these shares have gone up about 30-35%. So investors being nervous as they are after the battering they have taken in the last four or five months, should be pardoned if they take some profit of this sort ;especially after a long weekend ahead.

But it is a little bit worrying because oil seems to be going up a bit more in the last few days. That's a bit worrying. I am not so worried as such about the domestic cues because now the consensus seems to be that the GDP growth would probably be between 7.7-8.1-8.2% - depends on which side one is and anyway no one can predict that because it depends on so many non-controllable factors. So people should be pardoned for taking some profits off the table. As of now, I hold the belief that there are enough triggers domestically, with the trust vote out of the way, for us to get some rise from these levels.

Q: So unless commodity markets go up significantly, you would not see substantial downside from these levels?

A: That was correctly put. If we took a scenario of oil around USD 120 per barrel or maximum USD 125 per barrel, and inflation tapering down slowly from the current levels over the next six-months - that's been factored into this market. Nothing of that is going to really change people's thinking about the Indian market. If we get any of triggers like the nuclear deal - Nuclear Suppliers Group (NSG) clears and we see the first uranium coming into our airports and then we see pension, banking reforms, PSU disinvestment, the Pay Commission money coming into the malls - all that could really change sentiment and the cash flow.

Let us not forget one thing, Indian oil industry is a controlled industry. So when you look at oil price going up, we have to see the impact on the government deficit, which is what Rangarajan was saying yesterday. So if the government is able to get money through spectrum, through PSU disinvestment etc - government may not be that bad after all and so the next three months - I don't agree with people who say there are no triggers in this market. Domestically, there could be several triggers.