Nifty may touch 5400, fuel price hike to support mkt: Bhat

UR Bhat of Dalton Capital feels that the Nifty is inching towards 5400 if global cues support. He also adds that diesel price hike of Rs 4-5 per litre will support the market.

In an interview to CNBC-TV18, he said, "The market seems to be in a celebratory mood after what Mario Draghi did yesterday. In India the painful parliament session is going to be over today and thereafter there is a lot of hope that the oil price hike would be coming. If that were to come then possibly whatever figure that you mentioned is a possibility. These are all short-term celebratory issues, but in the medium-term we still have very serious problem."

As an investment strategy, Bhat is betting on infrastructure and power assuming that there is some movement forward from the government. "I think these are sectors that probably can attract some money when there is so much of money that is likely to come thanks to the monetary easing in Europe," he explain.

Here is an edited transcript.

Q: Do you see the Nifty going to 5450 again or even trying to pierce past it?

A: The market seems to be in a celebratory mood after what Mario Draghi did yesterday. In India, the parliament session will be over today, thereafter, there is a lot of hope that the oil price hike would be coming. If that were to come then possibly whatever figure that you mentioned is a possibility. These are all short-term celebratory issues, but in the medium-term, we still have very serious problem. Even if you take Europe, there have been two good things is given the size of the problem the bond buying program needs to be unlimited. Second, at least they are not claiming seniority. Therefore, at least the commercial market is still open to all these peripheral European countries.

But there is a negative aspect to it; we still have the German Constitutional Court to decide on the European Stability Mechanism (ESM) legality on September 12, so that is something that we need to watch. Also, even in the ECB itself, there are reports that the Bundesbank was very much against this. Therefore, since most of the cheques have to be written by Germany, there is certainly some amount of dissonance there. So we need to keenly watch it.