Mkts too dependent on FII flows: Quantum AMCPublished on Wed, Oct 08, 2008 at 14:17 | Source : CNBC-TV18 Updated at Wed, Oct 08, 2008 at 18:30
"The Indian domestic sector should be encouraged by policymakers to facilitate long-term money or domestic money into the stock market," Nevgi said, adding that, "Unless that happens, steady and sticky money would not come into Indian stock markets. We are now relying on short-term money and are paying a price with the markets coming down sharply."
Here is a verbatim transcript of the exclusive interview with Devendra Nevgi on CNBC-TV18. Also watch the accompanying video. Q: With such a negative sentiment and everything being universally bearish, capitulation has become an everyday phrase. When do you think the dust will finally settle? A: I am not surprised with the market moves. The Indian markets are strongly influenced by the Foreign-Institutional Investor (FII) flow. When FII flows came in during the last year, especially the short-term flows, we were talking about these flows trying to fund an economic growth in Indian economy, which is a little on the longer end of the side. So I am not surprised that FII outflows are taking the market down. You have to be an astrologer to understand when the markets will stop falling or when the flows will stop going out or start coming back. There has been carnage in the global markets and though It is very difficult to take a call as to when the selling will stop but on a longer-term basis, the markets have been looking attractive. As a fund, we have very few cash in. If I had more cash, we would have been happy to deploy it in these kinds of times. Q: The last bear market that we remember, the markets went from more than 6,000 in early 2000 all the way to 2,596 or 2,600 and that was a fall over 50%. It was perhaps a 60-70% fall. Do you see that kind of a fall? Would you see a number way below the 10,000-mark or do you think we must be in the last 10% of the fall? A: It is difficult to forecast the foreign flows. Unfortunately, the domestic flows in The Indian domestic sector should be encouraged by policymakers to facilitate long-term money or domestic money into the stock market. Unless that happens, the steady and sticky money would not come into Indian stock markets. We are now relying on short-term money and are paying a price with the markets coming down sharply and volatility going up even when So it's difficult to say - the market may go either way from here. It depends on where the external liquidity stops going out.
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