Aug 04, 2010, 01.55 PM | Source: CNBC-TV18

See cautiousness in pace of mkt upmove: Motilal Oswal AMC

Motilal Oswal AMC does not see big downsides for markets from these levels, said Nitin Rakesh, its CEO, in an exclusive interview to CNBC-TV18.

Nitin Rakesh, CEO, Motilal Oswal AMC

Q: Flows have been robust on the foreign institutional investor (FII) front at any rate but otherwise the market internals dont look inspiring, there is no market breadth, there is not that much volume being generated, how would you rate those parameters?

A: I think flows are good primarily because we are still being one of the most attractive pockets of growth and even though the market valuation seems a little high compared to our peers, I think that also shows that there is a high expectation of growth. So I think flows will continue to chase growth and that is what has happened in the first seven months of this year. On the internal the only thing that we need to watch out for is how the domestic flows are moving and I think that is a bit of a question mark at least in my mind given the fact that we havent seen any big flows coming out of mutual funds and whatever flows we were seeing from insurance also are likely to take at least some impact given the regulatory changes on that side as well.

If you talk to some of the players from the insurance side, they will tell you that they are bracing for slowdown inflows into their unit-linked insurance products (ULIP) plans as well. So I think domestic flows have not been that strong while the foreign flows have been good and strong and both of those put together effectively the volumes have been low primarily because retail interest is not very high in India at this point in time given the fact that retail interest is only high once the momentum builds up and we havent seen any major momentum related moves outside of this zone for almost the last three quarters now.

So I think we need to watch out for a breakout. Once that breakout happens whether it happens in two months or four months, it is anybodys call but I think it is not going to be that spectacular 50% kind of move here at least not in the next two quarters that we can see but it is more a cautious, steady, sector specific, stock specific play and that doesnt necessarily bring in a lot of volumes in the first phase.

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