Listless mkt: IIFL Cap foresees few triggers in 3-6 months

"There should be some triggers emerging in terms of interest rates, clarity on Europe situation, rainfall and some reforms,” he said in an interview to CNBC-TV18.

Meanwhile, Sudarshan Sukhani of s2analytics.com believes that the broad overall trend from the market is up. So, he suggests that one can take some long positions in the Nifty and in the Bank Nifty both of them.

"We would prefer to be on the side of the trend especially when the intraday trend is also favouring a long position atleast for a couple of days," he added.

On the macro front, Pandey believes that inflation is still sticky and above the Reserve Bank of India’s comfort level, so he expects the central bank to maintain a status quo in terms to a rate cut.

Given the market condition and aggressive disinvestment targets he is skeptical if the government would be able to meet fiscal deficit target this year.

Below is the edited transcript of Pandey’s interview with CNBC-TV18. Also watch the accompanying video.

Q: It has been so listless for the market, range bound, nothing really to talk about but in your sense do you think this is just the lull before the storm?

A: Right now the market is facing lot of uncertainties both on domestic front and global front, which is what is keeping it narrow range bound. Hopefully, there should be some triggers emerging over next 3-6 months in terms of interest rates, clarity on Europe situation, rainfall situation in India and possibly some reforms and that will set a direction for the market. In the very short term triggers are missing, there are lots of uncertainties, so the market is in a narrow range.

Q: The CPI data for the month of June was at 10.02%. How exactly would you read the inflation data till now including CPI, hence how would you extrapolate what the RBI could do on July 31st?

A: Inflation data still remains quite sticky, quite high, beyond Central Banks comfort. Diesel prices still haven’t gone up so there is some bit of suppressed inflation because of that. There are clear indicators that inflation remains the top priority of the Central Bank.

Food prices have run up because of poor rainfall in India and what's happening in US in terms of draught situation.So, that will also show up some impact. Possibly, we will have a status quo this month in terms of rate cuts. Next six months there could be some rate cuts if inflation softens.

Crude prices have again bounced back in last few days, so that takes away one possible trigger for downward in inflation. So, one should be cautious in terms of expecting any rate hikes in very short term.

Q: How would you position your portfolio to handle something like the monsoon deficiency? Would you stay away from some of these rural focus companies, may be FMCG, do you expect consumer demand to slowdown from here?

A: We are yet to get an answer on the impact of monsoon and the total rainfall. By month end we will have a better picture. Rainfall has improved. Last two years food gain production has been very strong. So the impact of bad monsoon on rural incomes and food grain supply should be limited to that extent especially with the recent increase in minimum support prices (MSPs).

Rural incomes are also slowing fundamentally because rural demand has been slowing. It has been very strong over last 2-3 years and we are seeing some moderation over there. So that may not be necessarily linked to monsoon progress.