In an interview to CNBC-TV18, Deven Choksey, MD of KR Choksey Securities presents his outlook for the market going forward. He also cites the reasons for the large amount of FII buying in the past few days.
Deven Choksey, MD of KR Choksey Securities presents his outlook on the market going forward, in an interview to CNBC-TV18. He cites that the appetite for the depreciated rupee is the reason for the kind of FII buying over the past few days. He also shares his strategy for the market going forward.
Below is the verbatim transcript of his interview to CNBC-TV18.
Q: What did you make of the kind of buying that we saw over the last three-four days and that eye-popping FII number of close to USD 400 million yesterday?
A: The FII numbers are not very surprising as they have been waiting on the shore for getting a confirmation on the rupee movement on an upside. Largely, those money which has come from the FIIs side has been also higher amount of allocation of funds by the ETFs.
They probably bet on the currency more than anybody else. So they probably want to make the best out of the opportunity available to them to bring in money at a depreciated rupee so that on an upside of the rupee, they end up making the gain on the currency side as well.
In the last few days after the new governor of RBI’s commentary came in, they got more convinced that the monetary actions which otherwise has been resulted into derailing the economy, could now put the economy back onto the shape and that is where their execution started.
Probably they started putting in more money not to surprise though. There is an appetite at a depreciated rupee to bring money into this country. May be if one looks at the real value of the rupee, then one gets more convinced that real value of rupee is staying somewhere sub-60/USD level.
If you count some premium to that, the rupee at 60-61/USD or 62/USD levels is not ruled out completely. That is where the unwinding of the entire position has started taking place and people have started buying into the market. So it is overall a confirmation of the rupee move that we have seen earlier.
Q: What will be your strategy now going forward? How would you advise retail to now participate in this market?
A: Both institution segment and the retail segment of the customers have been looking at these steady policy regime particularly from the RBI’s side. September 20 is the review which is expected to talk about, the fall in the interest rate or a slash in the interest rate and signal the growth revival in the economy.
Should that happen then the more amount of money would participate into the market. Currently, most of the retail guys as well as institutional guys are little reluctant to participate in the market given the sharp rally of about 800 points in last 8-9 trading sessions and more importantly they want to participate, but they want to look at individual stock specific basis vis-à-vis the index specific approach.
This is the time to buy into individual stocks on a merit basis in some quality ideas and that is where the people are putting in money or bringing money back into the equity markets. Though gradual process, it has started happening now.
Q: In terms of an upside for markets, where do you think the Nifty could possibly rally to and what is the cap that you could see going forward?
A: Defining the number for the Nifty would be equally a good challenge because currently that drive of the Nifty is largely by some of the heavyweights like yesterday Reliance contributed to it.
FMCG counters like HUL and IT counters contributed. These are some of the counters which are contributing a rally into the markets. It would be interesting to see whether some of the heavyweights from IT, which are quoting at a premium valuation. If they cool down, then probably the rally in the Nifty maybe capped somewhere between 6,050 and 6,100 for the time being.
But if they do not then probably in such situation, we might see even higher levels. As of now, we are tend to believe that probably market would do some amount of adjustment, some of the heavyweight in the IT space particularly in FMCG may cool down to an extent and some of the high beta counters probably may start participating into the market and that would balance the Nifty.
As of now, we believe that Nifty could stay in the range of 5,700 to 6,100 at least in the near-term in this month.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.