See leg-up for mkts on +ve Q4 nos: Religare Cap

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See leg-up for mkts on +ve Q4 nos: Religare Cap

Amitabh Chakraborty of Religare Capital Markets, feels that market is factoring in extremely pessimistic Q4 numbers and very-very pessimistic next year numbers. If there is any surprise on EPS numbers on the positive side, markets can get a leg up.

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Amitabh Chakraborty of Religare Capital Markets feels markets can come down to 2650 levels and settle around 2700 levels in the short-term.

According to him, the market is factoring in extremely pessimistic Q4 FY09 numbers and very pessimistic next year numbers. "So, if there is any surprise on EPS numbers on the positive side, the markets can get a leg up."

He sees elections as an important factor in the medium-term.

Q: Is there significant upside above 2,800, or, do you think the markets will at best be in a range from here?

A: If you take a short-term period, from between March 20 and March 26, i.e. the settlement, probably we can come down to the extent of 2,650 and possibly we will be settling around 2,700 levels. We are getting a lot of cues from the US-the Fed decision of buying the treasury and also previously buying the mortgage bonds and the quantitative easing that the Fed has decided and is doing-all these things have a deep repercussion on the dollar, following which, we have seen deepest and sharpest fall in dollar index.

We also saw that the US treasury yield has come down sharply; we have seen that the commodity markets have started moving up, because every time the dollar index comes down, commodity goes up-be it copper, CRB index or oil, we have seen it moving up. That will be having an effect on the equity market but that is to be seen as a bear market rally.

India also takes cues from global markets. At this point, I want to clear two points; firstly, the market is factoring in extremely pessimistic Q4 numbers as well as positive numbers next year. I have seen next year's numbers to the extent of 600-650 earnings per share (EPS), whereas, Bloomberg is still talking of 840. Probably, the market is factoring in very low EPS numbers, so if there is any surprise on the positive side on that number of earnings, market can get a leg up but in the medium-term, election is important.

In the derivatives market, we have seen that the option of 2,800-2,600 series has opened up in June and not in May. It means that the informed people are hedging their portfolio to the extent of June because that would be the time when the new government will come in-though the result is said to be out on May 16, the anticipation is that it will be in first week of June. Uncertainty is very important and once the uncertainty gets over, the market will take a direction based on the numbers of next year.

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