Mkts poised to rebound from recent sell off: Geosphere Cap

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Mkts poised to rebound from recent sell off: Geosphere Cap

The time to go short on India is over, says an optimistic Arvind Sanger of Geosphere Capital. "At this point, India along with other global emerging markets looks like it’s poised to rebound from recent sell off provided there's no other negative news coming out of Europe."

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The market extended its pullback in Thursday's trade, where the Nifty added another 100 points to close above the 5,000-mark. However both the Sensex and the Nifty closed the May series down 5% a piece.

The time to go short on India is over, says an optimistic Arvind Sanger of Geosphere Capital. "At this point, India along with other global emerging markets looks like it's poised to rebound from recent sell off provided there's no other negative news coming out of Europe."

Further, commenting on India's growth prospects, he says that the markets are well positioned and will move higher. "Inflationary fears have receded and, it is the monsoons that will decide whether they will outperform or underperform," Sanger says adding that if the global markets start to recover which he expects, at least the worst short-term fears of contagion and of the banking crisis reappearing, the markets should move back above 5000 and work up from there over next several months.

Below is a verbatim transcript of an exclusive interview with Arvind Sanger on CNBC-TV18. Also watch the accompanying video.

Q: If you were short on India over the last week or so, is it time to cover up those shorts? It is not prudent to stay short on market like India any more.

A: The time to go short was during the last few weeks. At this point, India along with other global emerging markets looks like its poised to rebound from recent sell off provided there's no other negative news coming out of Europe, which you will still have headline risk out of Europe. Some of the worst contagion fears are behind us, but I would argue that India and maybe other emerging markets like China just got a lucky break because it removes inflationary risks that are out there whether it was too rapidly rising oil or commodity prices.

Therefore, in a more benign inflationary environment, it reduces the headwind of central bankers in India's case RBI having to aggressively raise interest rates. So that should provide more room for the markets to work higher.

Q: India has outperformed in this fall so far. If you look at the last few weeks it has done pretty well relative to other global markets, do you think it can stretch its out performance even in the pullback?

A: I don't know about out performing further from here. It can perform for sure. Other markets which sold off more actually may have a slightly bigger rebound just because they sold off on European fears. On its own, India is well positioned and should continue to work higher with one of the risks at least for the next several quarters having receded and that being the inflationary fears that if the food inflation is lessening then other inflation factors might come to the fore. Pre monsoon there is one big unique risk that will determine whether India outperforms or underperforms other global markets.