May 21, 2013, 10.45 AM IST
The market seems quiet on the concern of a potential downgrade. However, foreign institutional investors (FIIs) continue to buy and that is good for the market.
In an interview to CNBC-TV18, Pashupati Advani of NBIE shared his outlook on the market and stocks across various sectors.
Below is the verbatim transcript of Pashupati Advani's interview on CNBC-TV18
Q: What would you do now, take profits here or do you think this rally has legs from here?
A: I think take a holiday, it looks like everybody else seems to be doing the same. It is very quiet. I think there is a lot of concern about a potential downgrade and that is keeping people on the sidelines.
I heard one of the other guests say earlier about looking at the rupee at 57-58, if the downgrade happens it could happen - the rupee could get even weaker. However, foreign institutional investors (FIIs) continue to buy. So that is a good sign. So I am pleased about that.
A: As you said we have got two schools of thought. One school of thought believes that there is not going to be a downgrade and therefore this is the time to load up and the other school says that there probably will be and therefore let us wait. One or the other is going to blink first. Certainly May traditionally seems to be the month of inaction, so people are saying okay let us wait till June and see what happens. We are already halfway through May anyway.
Q: We have had a fairly sharp rally through the first part of May itself. If you had to line out downside risk for the market as you saw it, how deep do you think it could get?
A: I actually do not think that there is going to be that deep a downside, however the Ben Bernanke has made a statement that they are going to maybe stop pumping in so much money. That has just brought in a little bit of uncertainty to the market because the market was enjoying the free ride and that is what has put a little bit of a dampener on it.
I do not think he is going to stop. He just has taken the enabling permission to stop. I do not think the program will really allow him to stop too much. So that is why the Dow continues to keep going up and money does end up flowing into emerging markets and therefore money does flow into us as well. So that is definitely one of the things that we are looking forward to.
Q: Do you think the market need to consolidate though here after the rally or do you see it taking out that old high of 6350 or 21000 plus and rallying further on from here?
A: It seems to be nibbling on it. More and more money comes from the west and we are seeing it. This is because there are not that many investment opportunities available. Europe is still in the doldrums, people are concerned.
The French have given some pretty bad economic numbers last week, so people are really scared about what is happening in Europe, so money is coming into emerging markets and we are seeing our share. Even though people are slightly underweight, in India, just the sheer amount of money that is coming into the system is actually making the markets go up.
Q: In the last couple of days there has been some revival in sentiment in the higher beta space like infrastructure and real estate. Are you buying that theme?
A: I believe the Finance Minister has been talking about doing certain things for infrastructure. I believe he is on a road show in Europe and then he is also going through the Middle East which is the pocket of serious sovereign wealth funds and he is talking about giving some kind of incentives for people who make bets in infrastructure.
I think if any of it comes through, right now infrastructure seems to be on the shelf but as the project starts waking up again, the old traditional players will be able to unlock some of their older projects, take some money off the table and then get back to business which is what we all require in this country.
Intermediate top in Nifty is probably in process. Markets may move towards distribution or correction; Monday may have seen an exhaustion gap in Nifty
ALL GOOD THINGS COME TO AN END. The rally in Nifty which started from 5975 and touched 6415 may now be coming to an end. Fresh buying should be done only after some downward movement in prices has taken place.
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