Rupee may once again go to 51-52/$: Fortune Equity Brokers

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Rupee may once again go to 51-52/$: Fortune Equity Brokers

Abhijit Chakraborty, senior VP of institutional equity at Fortune Equity Brokers spoke to CNBC-TV18 about where he sees the market moving to.

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Abhijit Chakraborty, senior vice president of institutional equity at Fortune Equity Brokers spoke to CNBC-TV18 about where he sees the market moving to. "It is rather likely to consolidate between 5300 and 5450 or 5500," he says. Chakraborty expects a temporary pause in the rupee carry trade and in the liquidity surge. "The dollar index could revert back to about 80-81 and rupee could once again go to 51-52 levels against the dollar," he says.

Below is the edited transcript of his comments. Also watch the accompanying video.

Q: How much upside do you see from here for the Nifty?

A: I believe that we are in more of a consolidation phase in the market right now after seeing such a sharp upside in the market I think the market will continue to be in a zone and neither see a very significant upside from here nor a downside. Downside protection is coming from positive global factors and Greece resolution and inflation coming down, so the macro economic details are going to give support to the market. But on the upside, we are not going to see the kind of sharp momentum that we were seeing in the beginning of the year. That is because I think the rupee carry trade which was essentially driven by liquidity factors had taken the market up I think that is going to take some pause, dollar index could revert back to about 80-81 and rupee could once again go to 51-52 levels. So I am expecting a temporary pause in the INR carry trade and a pause in the liquidity surge. So the market is going to be in a consolidation phase for the better part of the month of February.

Q: What kind of range do you see the market consolidating in and what would you set as the base of the floor for it?

A: I think the Nifty should consolidate in a range of 100-150 points, that is, between 5,300 and 5,450 or 5,500. But yes, one should book profits in stocks which have not been driven so much by fundamentals but purely by liquidity factors, and which have shown 60-80% kind of appreciation. On the downside, whenever market gives an opportunity of running correction of about 50-100 points on the Nifty, one should look to reinvest into the market. Broadly, 150-200 point kind of range should be seen on the Nifty.

Q: What did you make of the numbers from Tata Motors and how would you rate that stock compared to its auto peers now?

A: We have been continuously bullish on Tata Motors, mainly driven by the increase in the volumes and sales from Jaguar-Land Rover (JLR). Couple of launches by JLR, especially the Evoque and the new XF diesel, they have done much better than what the analysts were expecting. I think the record number of dispatches which have been seen in the month of December augurs well for the coming quarters as well. So yes, we are continuing to be very positive on Tata Motors and after yesterday's results, we are in the process of reviewing our price target as well as rating. However, I think the momentum in the stock is still going to be maintained and if it continues to be, put a hold on the stock as of now.

Q: Autos did well yesterday, what would be your pick in this space?

A: I think we are now getting cautious on the two-wheelers because of the kind of volume growth rate that we have seen for this industry in the last calendar year. It would be difficult to maintain that in the coming year and the valuations are at record highs, so we need to be cautious on the two-wheeler space. But among the four-wheelers, we continue to be positive on Tata Motors, Ashok Leyland , basically betting on the pickup and the CV cycle and also on Mahindra & Mahindra .

Q: Any thoughts on Suzlon , it had a very sharp retracement ever since its numbers?

A: We don't cover this stock but as is been seen in the market, all the stocks which were beaten down in the last year, especially ones who had balance sheet issues have seen a sharp kind of rally. Not all of them are backed by fundamentals; some of them are technically short coverings and some of these companies also would have to face equity dilution going forward in the current year. Not very positive on infrastructure space which are not backed by order accretion and improvement in balance sheets, but I can say that liquidity has taken these stocks up.

Q: The disappointment in heavyweights has been Bharti . The stock has lost 12% in the last seven days, any thoughts on that?

A: Telecom sector unfortunately continues to be in doldrums, mainly coming from dilly-dally on the policy front and the fact that Bharti is also struggling to increase its volume in the domestic market. The African consolidation is also taking some time and that has put pressure on the stock performance. But the stock has done quite well from its recent lows and till the time we get further clarity on 2G allocation and how the bidding and auction is going to take place, whether it is going to be for everybody or it is going to be only for incumbent players. So all those clarities is still needed, including how much further outgo is going to take place on account of the fresh auction of 2G licenses.

All those issues are continuing to play a part, but having said that, I feel that telecom space has particularly touched the trough in terms of its business fundamentals and slowly but steadily, the fundamentals can only improve. Bharti being the leader of the pack would always be safer to bet on the stock. So as and when there is further clarity on the industry, it would be always safer to go on Bharti and we remain positive on the stock.