Mkts to fall further ahead of earnings season: HDFC Secs

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » RELATED NEWS Mkt sees 10% earnings growth YoY in largecaps: Antique 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 09/02/12 Are Mutual Funds betting on Nifty?

Deepak Jasani , Head of Research at HDFC Securities feels the bailout plan could undergo some more changes before it is passed. He sees one more fall in the Indices ahead of the launch of the corporate results. "People will be slightly nervous ahead of the corporate season; they will look at booking profits and cutting losses."

 

Jasani is positive on the banking and capital goods sector.  "We will see some bounce going to about 13,500 or 13,600 levels." He believes the market has seen its bottom for the next month or two.

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

Q: What is your first reaction; would that make you buy the Nifty for instance?

 

A: One hasn't gone into the details of the plan. From a Prima facie impression that one gathers, it's quite pro-business or pro-corporate. However, who is going to bear the cost of all this that is slightly unclear at this point in time. Going by the initial flashes, one is not sure whether the US government is taking any measures on the tightening of regulation and corporate governance front. American people at large would be concerned with those two issues. If those are met in any way then the confidence level would return to the US markets in a large way. The plan could undergo some more changes before it is passed.

 

Q: If the suspension of this mark to market accounting rule goes through, will it stem the bad news for the short term?

 

A: Those are just temporary measures for the time being. One will have to do something more permanent in this regard rather than doing it in ad-hoc basis.

 

Q: How would you approach the markets now, you think a bottom has been formed for now and traders and investors should be in the market?

 

A: Yes, traders should be in the market and investors should wait. The markets were oversold yesterday and day before. So, we will see some bounce going to about 13,500 or 13,600 levels. We will need some more positive triggers for the markets to move up. People would be slightly nervous ahead of the corporate season; they will book profits and cut losses. So ahead of the launch of the corporate results we may see one more fall. One is not sure whether that would take the markets below the earlier levels at this point in time.

 

Q: On an aggregate basis on topline and bottom line, how do you expect this result season to pan out?

 

A: The Indian corporate sector has positively surprised us in the past. People have been quite bearish ahead of the results season. One or two sectors have to perform in a particular quarter, which will lead to the corporate results surprising everyone positively on an aggregate basis. This time around the banking sector could bring a positive surprise or one or two other sectors may.

 

Q: Other than banking, any other sector that you expect will give you good news?

 

A: Capital goods. Till now the execution was quite fine. Interest costs and raw material issues have not hampered their performance. People are probably underestimating those results.

 

Q: Would you say that the markets have seen the worst in terms of correction for now at least or do you think one can expect even more severe losses. People are even speaking about a four-digit Sensex?

 

A: For that (four-digit Sensex) we will need a bigger negative trigger. So for the next month or two we may have seen some sort of a bottom and beyond that it is a bit difficult to take a guess at this point in time.