Aug 02, 2013, 10.51 PM | Source: CNBC-TV18
Dilip Bhat, Joint MD, Prabhudas Lilladher believes that monsoon session of parliament may not turnout to be very productive.
Dilip Bhat (more)
Joint MD, Prabhudas Lilladher | Capital Expertise: Equity - Fundamental ,IPO
“I don’t think that market is riding very high on the hopes that the Parliament will really sit together and work out something and pass some meaningful bills. I think that hope has been given up long back and I don’t think that this fresh Parliament session is going bring that hope back,” Bhat said.
He is very bullish on IT companies following depreciation in rupee and recovery in US markets. Bhat said that Infosys and Wipro both were attractive at current levels. He sees Infosys to go for Rs 3300- Rs 3400.
He expects market to remain volatile. “I think markets possibly have reached a phase where possibly a sharp crack below 5,500 also looks possible for the markets. At the same time a little support from the FIIs can take index back to 6,100,”
Below is the verbatim transcript of the interview
Q: It has really been a crunching bear market as far as the midcap side of the market is concerned. What is your call? Are stocks reaching buy zone or you would still stay away?
A: I think markets are showing a fair amount of nervousness, vulnerability and I think it is also getting compounded by the fact that the foreign institutional investors (FIIs) have really stayed away from this entire scenario. At the moment I think there are too many factors in the market at play and I think they are really complicating the whole issues. But all said and done I think markets possibly have reached a phase where possibly a sharp crack below 5,500 also looks possible for the markets. At the same time a little support from the FIIs can take index back to 6,100.
My own belief is the markets will play out a this kind of a scenario even on the upper side and even on the lower side, possibly the lower side may precede the upper side. But overall I don’t think that the economy is really helping much and the fear of the rupee which is leading once again back to the interest rates to defend the rupee to whether Reserve Bank of India (RBI) will increase the repo rate by 100 or 200 basis point (bps) and what repercussions that will have I think those fears are also haunting the markets. So, all in all I think markets really remained very nervous and any small news is good enough for the markets to trigger a sell.
Q: We do have the monsoon session which begins as well. What is your expectation from that and do you think that there could be any sort of market moving developments we would be looking out for?
A: I think the way some of the announcements have been made by the government, not withstanding whether the legislation is on or not, the parliament session is on or not. I think that is enough for whatever the government had to do. I don’t think that market is riding very high on the hopes that the parliament will really sit together and workout something and pass some meaningful bills. I think that hope has been given up long back and I don’t think that this fresh parliament session is going bring that hope back. So, I think it is still foreign investors, local investors and even the industrialists would still look forward as to how the government is spelling out some of the reforms which they have been doing a fair bit of them in the last couple of months.
Q: How have you read the telecom numbers, which have come, any sort of upgrades that your brokerage has assumed now?
A: I think the things continue to be on a downward trend that really seems to be the case, whether it is Bharti or whether it is Idea , there is not much to cheer about. But I think the overall worry still remains that capital intensity of the business has only gone up and in these circumstances where the debts are piling up and getting money is not so easy and diluting at these rates are really going to be very expensive for some of these companies, these challenges continue to pose a serious risk to the upside of the companies. So, all said and done I think the core business will be steady. So maybe these companies may not fall much. But I think to expect some reasonable upside, it is very difficult to imagine.
Q: Is Infosys getting a bit overbought. What is your own call on Infosys? We have seen in the past the moves have been really volatile after every quarter. What is the call now after the kind of rally that we have seen in the Infosys counter?
A: I think the volatility has been pretty much close to the results after they have been announced. But I think our broader call still then was that Infosys looks good and even currently I think Infosys still looks pretty good and even Wipro looks pretty good for us. So, I think Infosys may have some amount of volatility here and there and maybe after the next results possibly. But I think by and large the direction seems to be that the stock is headed northwards and I think I would still go for something like Rs 3,300-3,400 for Infosys even from the current levels. I think overall the way the rupee has been behaving and the way we are talking about the recovery in the United States (US), I think all those things are really complementing the overall sentiments on the stock.
Q: In terms of the triggers next week, which are the key events that you would be looking out for?
A: I think the way the things are at the moment one has to watch out for some unforeseen events because those are the ones which have really rocked and really upset the markets in a very big way. So maybe, I am not too sure about some of the events which are lined up next week, of course the results season is still very much on and I think that will still have some amount of volatility in the markets. But by and large I think people will still see for something like whether the rupee has stabilised or whether the FII inflow is resuming or is not resuming and in case if it doesn’t resume it makes the markets much more vulnerable and of course if the parliament session doesn’t come out with any negative surprise, so I think all those events possibly will be there on the radar of a lot of investors.
Ashwani Gujral, Fund Manager at ashwanigujral.com
Ashwani Gujral of ashwanigujral.com recommends buy
Major contributor for today’s rally was Infosys
Barely one and a half months into the new year, th
At 7: 46 am (IST), Asian markets were trading firm