Liquidity tightening concerns to remain: Ramesh Damani

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Ramesh Damani , Member of BSE has a view that there are no signs of top being formed in the market and it can go higher. He adds that there is good value across small,mid  and large caps.

Damani feels that public participation in the market is still very low and concerns of liquidity tightening over next few months still remain.

This is how Ramesh Damani views the market:

On domestic market:

 

At every level of the Index, you can come up with the same question, whether it was at 10,000, which seems very roughly at that level or 12,000 or 14,000. But if you look at the large set of quarterly earnings numbers that came on, we are getting good quality companies at single digit PEs and 3-4% yields. There is no sign of a top being formed in the market in terms of public participation or any other thing. So if you assess it, we actually have breadth opening up dramatically over the last 2 weeks or so. So if we assess it very coyly and soberly, just because we are so high doesn't mean we can't go higher. 

 

I am feeling pretty good about it. I think the market needed a period of consolidation, it finished that period of consolidation and it broke out without a lot of fanfare. What has been the most heartening part to me was the breadth of the market, which has improved dramatically. I am seeing a lot of good quality companies, with good prospects in the next year - 15-20% growth, available at single digit PEs that's fairly good yields. My sense is if you look at the domestic basket rather than the global basket, you probably tend to do well. It's not necessarily a bad time to even put fresh money to invest in the market.  

  

On retail sentiment:

 

Looking at the lessons of history that great bull market ends only with public clamoring to buy stocks, they don't end with public selling stocks. As you are seeing there is such a reticence in India to go out and buy stocks, I think there would come a stage when the public will be buying stocks carelessly. I think there are some signs of excess in the private equity market in terms of the yields in which companies are being able to raised capital. In terms of overall looking of the public participating this market, I think it is being done at abysmally low levels and that level will have to increase before we see a final top in this great bull market.

 

On India:

 

I think the rupee - dollar rate changes huge amount of equations of how you look at investment opportunities. If liquidity tightens globally, there is whiff of that going on that liquidity over the nest 3 months to 6 months will be starting to tighten. The capital that was so easily available will not be so easily available and once liquidity is choked in the market, it can even stop bull market on its track.

 

Import duty cut on liquor sector:

The biggest player in this business United Spirits has realized that scotch is going to be huge in India and it has already made that acquisition to flank himself against the possibility of imports. As you are aware, drinking is a matter of brand, it's a creature of habit, you always like your favourite drink at the favourite place, at the favourite table and with favourite people. So it's not very easy for people to change brands. If you look at a country like ours, where you cannot advertise liquor brands how do you create the visibility or the mind space in consumers with the foreign brand? Clearly, there will be some takeaways in terms of 5 star hotels people buying it. But I think the domestic companies have that have intrinsic mindset, intrinsic brand values will probably do okay and they have already made moves to protect themselves against foreign competition coming in.