Mkt comfortable with NDA and UPA sans Left: Dipan Mehta

Excerpts from What's Hot on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

The markets on May 13 witnessed a highly volatile session ahead of the Lok Sabha elections outcome on Saturday. Dipan Mehta, Member, BSE and NSE, said the stock market was comfortable with both the BJP-led National Democratic Alliance and the Congress-led United Progressive Alliance but without the Left parties.

On today's move, Mehta said, "We saw a bout of profit booking, which impacted the market. At the same time, the European markets also were trading lower. So, we need to factor that in as well. I think that this was something that was expected that a lot of players would lighten their positions just before the verdict that would be out on Saturday. That's about it."

Also read: UPA forming govt may be favourable for mkt: Raamdeo Agrawal  

Here is a verbatim transcript of the exclusive interview with Dipan Mehta on CNBC-TV18. Also watch the accompanying video.

Q: The market just went into a tailspin the last 20 minutes. What did the market pick up that none of us know?

A: I think we saw a bout of profit booking, which impacted the market. At the same time, the European markets also were trading lower. So, we need to factor that in as well. I think that this was something that was expected that a lot of players would lighten their positions just before the verdict that would be out on Saturday. That's about it.

But one needs to keep in mind that a lot of the gains that we had on Tuesday, we are still positive net-net for the week. So, I don't think it is such a bad proposition at this point.

Q: Was it to do also with some exit poll results filtering into the market in some possible way?

A: That is certainly is a possibility that someone maybe had a clue of what kind of exit polls would come and markets generally tend to get a feel about these things. That also could have been playing out because as I understand, the exit polls are also throwing up a mixed picture. Although it is quite likely that the NDA or UPA would emerge as the two largest blocs, they would still need to cobble a lot of the minority and regional parties to form a stable government.

But at least I think it is getting clearer that the Third Front is not a likely scenario at this point. At least that is what the exit polls are showing. I think that is also what is getting discounted in the markets.

Q: What's the scenario you're looking at? It has been a pretty mixed set of voices some of the market players: say it is going to be NDA, some say UPA. One thinks that there is consensus on it, must not be Third Front as you said rightly. What would be the right one to boost the markets tomorrow post the exit poll results?

A: I think the market is comfortable with the UPA or the NDA. But the key thing one should be looking out for is what the communists, what role they have to play in the formation of the government and if they have to play a role in the formation of the government, which is a likelihood if the UPA-communist alliance again gets back into the reckoning that is a scenario which we are not completely comfortable with because in that scenario there is also a talk that the CPM may want another Prime Minister and then that could get quite ugly for the market. But as of now, I think it seems likely that it is UPA or NDA and one thing one needs to keep in mind is that the sense which I am getting is that the regional parties, the smaller parties they want to go with the winner.

There is broad consensus that nobody wants to sit in the opposition and none of the pre-poll alliances are that strong and that much based on ideology that they cannot be broken off post poll results. It is quite certain that anybody with 10 or 15 MPs also may be quite interested in joining the government and that particular force is quite powerful for our market, which means that the formation of a stable government after the results are out that particular situation the probability does improve quite significantly.