Liquidity may take Nifty to 5400-5500: Quantum Sec

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Liquidity may take Nifty to 5400-5500: Quantum Sec

Sanjay Dutt of Quantum Securities sees some sector and stock rotation in markets now. He says that the markets are at higher end of valuations at current levels. According to Dutt, liquidity may take Nifty to 5,400-5,500. �Will take some profits at around 5,400-5,500,� he says.

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Sanjay Dutt of Quantum Securities sees some sector and stock rotation in markets now. He says that the markets are at higher end of valuations at current levels.

According to Dutt, liquidity may take Nifty to 5,400-5,500. "Will take some profits at around 5,400-5,500," he says.

Here is a verbatim transcript of an exclusive interview with Sanjay Dutt on CNBC-TV18. Also watch the accompanying video.

Q: We have gone so far. Do you think the markets got it in it to kill that 5300 mark?

A: Market is in a situation where you are worried about one way kind of a situation. You have seen this for the last three-four weeks. The worry of a one way market for a money manager or an investor is very peculiar, whether it is on the downside or the upside because you do not know when the train is going to stop. If you don't board the train, you miss it and you underperform.

At this juncture, where you crossed key resistances and you got some more headwinds around the 5280-5350 levels, it is very difficult to call that whether you got more room left. However, if you are invested, then remain invested. According to me, you would see some amount of churning, sector rotation and stock rotation taking place. The laggards are left behind and have stories intact. The fundamentals are also intact. They will do the catch up act, particularly the midcap space. The others would consolidate or correct.

Q: What do fundamentals warrant? Do you think we stop at 5300 and stay in the broader six-seven months trading range that we have been in? Do fundamentals and liquidity warrant a range expansion? Even if it is not a whole lot, maybe 5300 goes to 5500 and the range gets expanded on the way up. Which is the more likely probability or event in your eyes?

A: According to me, 5400-5500 is a likely probability. However, even at the current levels, we are fairly valued. In fact, we are on the upper end of the range where we should be. That is a cause of worry. We need to look at the constituents as to what will take the markets up now in terms of sectors, whether it is going to be technology, which will add more gain, oil and gas or banking.

It is very difficult to justify another 10% or 15% increase in valuation purely based on fundamentals. The biggest problem, we all are grabbling with, is the worry of a one way market because those are purely driven by liquidity and other technical factors than pure fundamentals.