No reason for markets to retrace sharply: Motilal Oswal

Q: Can you foresee another 8-10% kind of move if the Nifty makes it past 5,000 or would you draw the line somewhere around here?
A: I think what we are seeing in the backdrop of global sentiment, liquidity and domestic news it's foolhardy to try to predict what level the market will go and stop at. I think what is important is to see what is going to be the follow through to the big move and we had pretty big month, the past few weeks. So from our point of view rather than focusing on a specific Nifty level, from sentiment point of view 5,000 is the key, the idea will be to focus on more the follow through from earnings for the quarter or other economic data. On that front it definitely looks like there is more reason to stay bullish than anything else.

Q: At this point how likely is the chance of a big retracement from the market because that is what a lot of people are calling for the big one in terms of a correction?
A: The history of markets tell us that every time we believe, consensus tells us something, the market will always surprise us and that is what is happening. There were fair number of people based on the monsoon backdrop or number of other reasons had been waiting to enter into the market at much lower levels. There will be periods of ups and downs. We had very long consolidation phase, the whole of June and July. I don't see any reason why the market should retrace very sharply unless we have accompanying factors globally as well, at this point of time it looks hard to foresee that in the near-term.

Q: How would the market read the Reliance monetizing a part of the treasury stock news?
A: It's a combination of an opportunity to clean the whole treasury stake as well as take advantage of the fact that this is a good opportunity for fund raising for the company. I don't think the company has an issue, they have equities fairly comfortable, they have large amount of cash on the balance sheet. So I don't think one should read whole lot more than there needs to be. There is fairly good appetite, the stock has done well over the last few weeks. So it's a combination of opportunity plus time to raise some capital.

Q: What about steel- Tata Steel surprised yesterday with its move and metals have been very strong, would you still back that space?

A: The consumptions story is fairly robust especially in the developing world. At some point people had to overlook the overhang of the Corus issue and that is what happening now. It is getting harder and harder to find relative pockets of valuation that seem reasonable. So people are really trying to identify those stories that so far had not delivered a whole lot. Overall the whole metal pack has been shining very brightly; partly it's to do with the whole global commodity run up, dollar depreciation, everything put together. It is little bit where we were couple of years ago in terms of global consolidated move across all asset classes whether it's ferrous metals or even gold and even silver hit a lifetime high yesterday which clearly is an indication as well.

Q: There is an initial public offer (IPO) from Pipavav, any thoughts on that? It is interesting that on day one the High Networth Individuals (HNIs) went in 7 times over subscribed?
A: I think its not just HNI; there is fairly high institutional demand as well from large global institutions all the way to domestic. So despite all the concerns around the aggressive pricing, I think the sentiment for just the overall infrastructure space and hence this sector being one of those inclusions, I think there is fairly high appetite right now and going back to whole discussion around developers is developing, the themes that continue to emerge globally that it's a growth versus value play. So we are going to see lot more appetite for markets like China and India and not to say that global markets or developed world will not get any attention, its becoming more and more of a value play with consensus driven slow growth, slow recovery process versus high growth. The seductive nature of emerging markets is back right now and that is likely to continue to play out.

Q: Is it a trading quirk  to get the deal done (reliance) at Rs 2,125, the market price is adjusted close to that level or do you think the reaction is reflecting any concerns on the  this deal getting done?
A: It is a short-term technical issue of getting the deal crossed. I don't think concern is going to linger on for long. End of the day this is a very largest cap you have in the frontline stocks and there is no fundamental change per se. I don't see any long-term issue; it's a technical short-term issue.