See bit more volatility in mkts ahead: Quantum AMC

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

IV Subramanium, Director, Quantum AMC, expects markets to be a bit more volatile going forward.

 

According to him, global growth is going to be a lot lower than it was in the past and feels commodity cycles will be a bit subdued. "So, the stock prices are unlikely to reflect increased buoyancy going forward, and markets maybe rangebound unless it falls to the type of selling we saw at the end of last month when there was value in those stocks. One may want to stay away from them."

 

He advises cautious buying into any of the mid-sized companies because he expects them to face increased headwinds.

 

Here is a verbatim transcript of the exclusive interview with IV Subramanium on CNBC-TV18. Also watch the accompanying video.

 

Q: We have sort of taken a pause in this bear market bounce currently at 3,100 levels. Do you sense we will consolidate here for a while or do you sense there would be some more wave of selling pressure in the days to come?

 

A: I expect the markets to be a bit more volatile going forward. I do not know when exactly the selling would come but there is still lot of short-term FII (foreign institutional investor) money left in India and they may want to exit India which could result in volatility in Indian stock market.

 

Q: What is your view on commodity related stocks which saw a bit of a rally in fact a lot of rally in last three-four trading sessions; today it has been a bit subdued over there?

 

A: I think a week back even closer to the end of October, some of the metal stocks were beaten down to such an extent that it appeared to be a value stock. So if you look at the commodity cycles over a longer period of time, maybe at those prices it made sense to buy. Having said that, we all realize that global growth is going to be a lot lower than it was in the past. To that extent, the commodity cycles will be a bit subdued.

 

So, the stock prices are unlikely to reflect increased buoyancy going forward and it maybe rangebound and unless it falls to the type of selling we saw at the end of last month when there was value in those stocks, one may want to stay away from them.

 

Q: Just done with earnings season, at Quantum have you all changed your outlook on any sectors or any themes either on the upside or the downside significantly from the original view?

 

A: I think constantly we do look at our portfolios and at new stocks. Rebalancing is part and parcel of portfolio management. So, as and when we find increased value in certain segments or the conviction levels are high then we do reshuffle the portfolio. But we have not done anything significantly different than we did in the past.

 

Q: For last couple of days, we have seen the mid-caps outperforming, you think that would continue because from valuations parameters they might look more attractive at these levels?

 

A: On a relative basis, some of them mid-cap stocks which had declined sharply may look better in terms of valuations and therefore the demand for those stocks could be high. But if I look at the way the economies likely to pan out over the next year or so, the mid-sized companies are likely to face increased headwinds. Therefore, I would be very cautious buying into any of the mid-sized companies.

 

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