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Jul 12, 2012, 08.23 AM IST
Dilip Bhat of Prabhudas Lilladher says, the market seems to be consolidating around the level of 5,300-5,350. “In the short run, I think market probably will still remain positive, upto end of July or so. Over next eight-twelve months, I think market has enough factors to leave it much below 5,000 and maybe test even 4,500."
What began as a quiet start at the bourses snowballed into a strong rally, picking up steam in the last leg of trade.
In an interview to CNBC-TV18, Dilip Bhat, joint managing director of Prabhudas Lilladher says, the market seems to be consolidating around the level of 5,300-5,350. "In the short run, I think the market probably will still remain positive, upto end of July or so," he asserts.
However, Bhat doesn't think that the market has enough strength to deliver a sustainable gain beyond 5,400 or 5,500. "Over next eight-twelve months, I think the market has enough factors to leave it much below 5,000 and maybe test even 4,500," he adds.
Meanwhile, Sudarshan Sukhani of s2analytics.com says, at this point, there is a very decent profit and short-term traders should take that profit.
Below is the edited transcript of Dilip Bhat’s interview on CNBC-TV18. Also watch the accompanying videos.
Q: What can the market achieve through July?
A: I think the market seems to be consolidating around the level of 5,300-5,350. I think a series of complimentary events are probably playing it out. The bond yields suggest that possibly the Reserve Bank of India (RBI) is going to ease the monetary policy. The rupee is doing its bit. I think some kind of optimism on the reforms front is also probably playing its part. So, you can say some of these events are playing in a concert at the moment. That is helping the market.
In the short run, I think market probably will still remain positive, upto end of July or so. It could still hold out, but I don’t think that it has enough strength to deliver a sustainable gain beyond 5,400 or 5,500. I think in the short run, the market may hold out, may remain volatile. That would be the best possible scenario for the market. Over next eight-twelve months, I think market has enough factors to leave it much below 5,000 and maybe test even 4,500.
Q: What are the key worries at this point? If you think the upside will only restrict itself to 5,400, what makes you concern, is it the monsoon situation or something else?
A: The GDP growth still seems to be pretty weak. We have seen that the GDP growth has come down to around 5.5%. So, maybe one or two quarters around this level is not impossible. Any growth below 7% will continue to result in a very anemic corporate earnings growth. More importantly, probably the fiscal deficit will continue to be a major source of worry for India.
At 5.5-6% or 6-6.5% GDP growth, it can’t support a very huge fiscal deficit. It is very difficult to manage a fiscal deficit, unless and until oil comes off very sharply and rupee appreciates to around 50. But all those things don’t seem to be on the horizon. But I think this is a single biggest worry that will spook the market at the moment. Those worries can really take the market down and at best can probably hold the market around 5,000-5,300 levels.
Q: Infosys has a habit of reacting very violently post its numbers. What are you expecting to hear in terms of the possible scaling down of guidance and the commentary from the management this time around?
A: Everybody knows that Q1 is going to be weak. I don’t think that there is going to be any surprise, we are all talking in the dollar terms. Ofcourse in the rupee terms, it is going to be a good growth. Going forward, the management is in a transitional phase. I think coming to terms with some of the problems and some of the issues whether they have to gain a market share or whether they have to chase the profitability remain a dilemma. So, I think all this will lead to management still guiding for a very sober growth. I don’t think that they would have anything much to talk on the optimistic side. So, probably I think that is what we expect from Infosys.
Q: If we do see an extension of this move between infrastructure and real estate, which are the pockets that you would prefer now?
A: Since I am not very gung-ho on the market, I think this market remains a pick and choose. I think rather than taking a call on the sector, it will be pick and choose. For example, in real estate, I would still go for something like Sobha Developers . It appears to be good from the current levels. I think that’s a stock which can go places. I am not too keen on HDIL and certainly not keen on Unitech , maybe DLF could fit in somewhere.
As far as the infrastructure space is concerned, it would still be something like an IVRCL , for reasons which are not necessarily fundamental at the moment. So, I think it’s going to be very limited choice and maybe a Larsen & Toubro would fit in, but certainly not at these levels.
May 23 2013, 16:33
- in Asian markets
May 23 2013, 09:33
- in Technicals