Nifty won't fall below 4500-4600: Emkay Global

In an exclusive interview with CNBC-TV18, Krishna Kumar Karwa, Managing Director, Emkay Global Financial Services, discusses Dubai World debt crisis and his outlook for the Indian markets.

Here is a verbatim transcript of an exclusive interview with Krishna Kumar Karwa on CNBC-TV18. Also watch the accompanying video.

Q: Do you think its sentimental knee jerk reaction or should one be worried about what happened in Dubai yesterday?

A: Initially it is a knee-jerk reaction. After the episode of 2008; investors would tend to react to such news negatively and take money off the table. But the issue is not so big, USD 80 billion in the bigger scheme of things is not so big and once details were out in terms of how things are going to get settled and how it is going to impact various corporates, then sentiment will again turn positive. But the tendency of investors ‘once beaten twice shy’, initially take money of the table.

Also if one looks at the markets they have given very good returns in the last 6-7 months, so there is no harm in investors taking some money off the table and that is what we are seeing.

Q: The tough thing to call over here has the downside risk to this market – what would you put it at?

A: If you look at the markets for the last few months, the moment the Nifty hits around 5,000 odd levels, you enter into what we call a corridor of uncertainty where investors were not able to take a call— from these levels and technically below 4,900 odd levels—what is the risk reward ratio on the upside. We have also seen in the month of November when the indices corrected they went down to as low as 4,500 and from there again it’s bounced back to 5,000.

But the point is that technically speaking below 4,900; you are looking closer to 4,500-4,600.

Q; Do you expect it to go there because last time it went to 4,600 a lot of people could not buy  because they were expecting even lower levels of 4,200-4,100 and the market bounced right back – would you start accumulating below 4,900 or do you wait now?

A: It looks like, globally indices seem to be in an uncertain zone and if you have some negative news flow or negative flows on the markets then you could see some correction. Last time around investors thought that at 4,500-4,600 there could be a further dip and it bounced back. I don’t believe that we should see below 4,500-4,600 because you have liquidity on the sidelines, domestic liquidity which inherently should keep the bourses stable at those levels.

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