More clarification needed: Dimensions Consulting

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Ajay Srivastava of Dimensions Consulting says they are waiting for some announcement from the Finance Ministry because policy guidelines are supposed to be implemeneted smoothly.

 

Excerpts from CNBC-TV18's exclusive interview with Ajay Srivastava:

Q: We have got a circuit, what do you do from here now, how do you approach this market?

A: One is that we are waiting for the finance ministry, I think they will step in and we should look forward to some announcement coming, policy guidelines are supposed to be implemented smoothly not in this manner that it knee-jerks the market out of the whack.

I think we should expect in the next half an hour some kind of a clarification coming out of Finance Ministry. If it does not come out, you are looking out for the second filter very clearly because this period which we fell and what we are seeing here is that nobody is allowed and exit at all. And margins calls would have already been triggered off on the systems of every broker which means that the moment market opens every stock that is available that the margin will be put off for sale, there are no buyers in the market today so you are staring at a second filter straight up as it opens which means that Finance Ministry has to come in and put some kind of clarification to end this bout of a mania which has hit the market.

Q: As an equity watcher as well how have you read all these harsh cries that perhaps this is more about what the rupee is doing rather than what the stock market is?

A: I do not think that is correct, I think what we have been hearing is that the Finance Ministry in Delhi is doing two major things, firstly they believe that certain promoter money has stepped into this market artificially boosting the price, pre-issues etc, there has been a big worry for the last one year for the Finance Ministry there has been a paper going around which talks about this promoter, it has been dealt in the past as well, the P-Notes have been used by the promoters group.

Secondly, I think the ferocity of the inflow and the lack of clarity where it is coming from is bothering Sebi and RBI , it is not that they have been talking to the market participants, they have not been getting their answers as to where this money is coming from. This money is fairly frothy, we have been talking about fundamentals, we have been talking about just the momentum flow etc and that is bothering.

So it is not something out of the blue as such and I do not think there is a knee-jerk reaction to rupee problem, I think we are genuinely worried that the kind of inflows hitting, the quality the inflows hitting is not the right thing for the market and yes there is pain when it is going to happen. My view is different that when you climb 4,000 in four days we celebrate so why commiserate when you fall 4,000 in four days.