Nifty to inch up once US debt crisis ends: Deven Choksey

Excerpts from Bazaar on CNBC-TV18 Watch the full show » 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

With a not so great expiry for the market and the deadlock over US debt ceiling still looming large, Nifty has shifted its base to the downside. Reading the market in the volatile conditions, Deven Choksey, managing director of KR Choksey Securities says it is likely to be a range bound market between 5,350 and 5,700 levels.

Choksey says the market will stabilize once the US deadlock is over. "The US debt raising plan is likely to pan out in subsequent days. It is around that period when the global markets, including India that will try hit the downside, and once the plan is clear market is likely to inch up," he believes.

Below is a transcript of Deven Choksey's interview with CNBC-TV18. Also watch the accompanying video.

Q: How are you feeling about the market because the expiry wasn't great? Do you think we are setting ourselves for even lower targets on the Nifty now?

A: The expiry has shifted the base downside. We are looking at 5,400 as a level at which most of the calls and puts were traded, the expiry suggests that it has gone down to 5,300 and even the call writings base has also shifted down to 5,700. Hence, the market range possibly is going to stay between 5,350 and 5,700 levels.

One can buy 5,700 largely because you are unsure about how the outcome is going to be on the investment side. The current deadlock in US between the two political parties on deficit cut and the debt raising plan is going to pan out in subsequent days. Around that period probably the global markets including the Indian market would probably try and make an attempt to hit the downside. Once the US deadlock is over, the debt raising plan is clear, market may probably start stabilizing and probably inch up.

We may cross above these levels, however, I would rather stay put on making any comment on that front. One can try and create some long position on the long option side.

Q: What is breaking the markets back is the run in these infrastructure stocks? Are JP Associates , HCC  are it mostly being driven by poor earnings or is there something else that is breaking the stocks down?

A: Either the projects of these companies are not happening in time or the progress is too slow. Most of the infrastructure companies are troubled with the slow policies on clearances and also the interest rate scenario will certainly hit the earnings. Most of these companies are worried about the impact of slow projects on their financials and also to ultimately show the same to the bankers. The day when we start getting some positive news, infrastructure would possibly start looking up into the market because they hold lot of potential.

Q: There was a brief spate of life in the real estate sector, but over the last three days stocks like Indiabulls Real Estate , Orbit all down 12% to 13%. Where will these stocks stabilize?

A: I think no idea where would they go and stabilize. For a stock to stabilize, two things are important, valuations and buying happening on that valuation. I would expect that the valuations are already there and the housing properties are still selling, hence, gaps and lags are the worries for investors who are not coming into market.

It is a broader issue for the market as 95% of the volume stays with the trading and non-trading delivery and only 5% of the volumes are into the delivery. It suggests that the investors are not coming into the market and market is purely driven by the trading funds or index funds.

Hence, to a greater extent until investors comes into the market, taking call on any particular space or buying one on the valuation with confidence, it would always be in dilemma. Hence, I am not too sure when can buying return into the real estate space.

Q: What have you made of the Titan numbers?

A: The numbers are quite okay and as long as the lifestyle demand continues the numbers should be remaining okay. However, the pressure may be mounted on the margin front because of the basic increase into the gold prices. Hence, we will have to be fielded by the company and by increasing the prices over a period of time.

Nevertheless, the valuations remain on a reasonably higher side. If one wants to buy this company probably one would certainly want to buy valuations which are far more reasonable. Hence, I would stay away from it, for the time being we will wait for some opportunities in other space and other stocks as well.

Q: Do you see monsoon as a big swing factor to the market?

A: It definitely keeps you worried that if the deficit is not recovered then we are going to have some more trouble, going forward in this space. However, the meteorological department is expecting monsoon to revive in the month of August and probably cover the deficit. I hope for no troubles on this front, since there are many other issues to deal with.

Q: How much has sentiment been tangibly affected in the last week among the retail, high net worth individuals (HNI)?

A: Retail HNI have stopped coming to the market as they believe this market is driven by traders. The market is not driven by investors because if the investors are not getting the confidence to come to this market, if the market is operated on non-delivery basis for such a long period of time, the sentiment is going to remain weak.

Other factors have played out in the last week, and probably the rate of interest has also played its role, but largely it is that something that has to be done in order to invite investors into the market vis-à-vis traders. The situation could probably prolong for longer period of time and will be difficult for investors to come back with the confidence into the market.