Vetri Subramaniam, Head – Equity Funds, Religare MF, said current consolidation might persist a bit longer and the markets might see a little bit more downside in prices. "The Sensex may drop even closer to 12,000-12,500," he added.
Also read: See 10-15% correction in mkts: Aberdeen AMC
Here is a verbatim transcript of the exclusive interview with Vetri Subramaniam on CNBC-TV18. Also watch the accompanying video.

Q: A quick word on the market. Do you think we are done with the correction or this is just a pullback of the 600-point Nifty fall that we have had last week?

A: I would tend to believe that this consolidation might persist a bit longer and you might see a little bit more downside in prices. My sense is that we could see the market eventually droping down maybe even closer to 12,000-12,500.

The cues are really more global at this point in time. I know we all attribute whatever has happened in the last week to the budget. But I would actually argue that what we are doing is very consistent with the kind of global trends that are visible in equity markets or in commodities.

So, it is just the same trade, which is playing across the world. It is still a little bit of heightened volatility at this point of time.

Q: Are you getting the sense that the market now is moving to consolidate in a much lower range than what we were working with before the budget?

A: Possible. One way of looking at this is, we got a move down, if you go back in time to late last year from about 15,500 to about 7,500 in two-three months flat. And then we spent almost three or four months banging around in a 20-25% range. Then from March to June, we got almost a 100% rally. Therefore, it should be only, perhaps, to be expected that we then go into some kind of a consolidation and holding phase again. I think that is essentially what we are now slipping into.

Remember that we are also now starting to grapple with the fact that we raised the valuation on a lot of companies significantly. We are not fully clear on what kind of a recovery we are getting. The companies with global linkages, things are still looking fairly uncertain. The funding environment has improved but equally we have got to worry about the local fiscal deficit and the impact of interest rates. So, I think it is a fairly trying set of macro issues that we are all confronted with at this point.
Continued on next page ...