Mkt fundamentals look good: Ambit Capital

Excerpts from CNBC-TV18's exclusive interview with JP Sinha:

Q: first global cues and then politics, how is the situation now?

A: Globally things are not yet settled. Overall we are seeing that the money that has been pumped to the tune of USD 300 billion plus doesn't instill too much of confidence and that shows there are more signs of weaknesses to come.

If one looks at the discount rate and the window opened for the banks that is not drawing enough attention. USD 270 million odd was the average which has been lend to the banks through this route, which is peanuts.

It basically shows that the Fed is trying to find out which are the banks or the financial institutions, which are not healthy at this point in time.

Secondly, the money which has come to the markets and which is now going out that is something which is slightly worrying even though the amount which has been invested in India is not significant enough if one looks at the global exposure but for Indian market it is more significant and even USD 1 billion exit can take away 1000-points and that is exactly what we have seen.

To that extent worry continues at this point in time however domestically both macro and micro factors are very healthy at this point in time and we are not seeing enough dents in that but politically things are not yet settled.

Q: How worried the market should be about the political situation because that might have been one reason why we did not play catch up with the global markets yesterday?

A: You are right. This is precisely one reason why we have lagged behind and why the Indian markets may continue to under perform even when there recovery comes. It's a situation, which would take its own toll and one goes by the political analysts, which have gone on record saying anything between six-nine months is a horizon to look at. 

If one looks at the nuclear agreement in totality, I think it's a good move by the Indian government to secure energy and that's the requirement of both the companies as well as for the infrastructure growth. In that sense it makes sense. But yes the political things take its own course and you never know if things go wrong there could be some pressure on the markets as well.

Having said that I repeat that both the macro and micro factors are in a healthy shape at this point in time.

Q: Is that likely another 4-5% downside from here?

A: Yes, I don't rule out that completely because as I mentioned the concerns of the sub-prime lending still continues and unless that settles down, I don't rule it out.

Having said that if we go down  3-4%, I think that brings a very good buying opportunity for the long-term investors.

Q: Where do you find value? You have said there might be buying opportunities now, where would you pick now if the market were to a bit come off?

A: There are three or four sector which we like at the current valuation. One is IT and second is banking. We are very bullish on capital goods and engineering, particularly power related companies. We are also looking at oil services companies, which are generating values from the long-term perspective particularly when we see the hiring rates at the current level and the expectations going forward. Then there are selective midcaps, which we are looking at.