Nifty may hit 6K; export cos to perform well in Q2: Cogito

Second quarter earnings season will kick off this week with IT giant Infosys announcing its numbers. Sangeeta Purushottam, founder, Cogito Advisors expects export oriented sectors to post positive earnings. However, negative surprises are likely from companies which have not hedged sharp currency movements, she told CNBC-TV18 in an interview.

Meanwhile, she added that the Nifty is likely to see the psychological 6000 level going ahead. Also read: Strong growth expected for IT cos in Q2: Analysts Below is the edited transcript of Purushottam’s interview to CNBC-TV18. Q: What is the sense you are getting? This rally came out of nowhere largely because of global cues, do you sell into this rally or do you say you will just watch the liquidity and not sell? A: I think around 6,000 level is where we have seen resistance and that has been from a technical perspective. However, even on a fundamental perspective, when the market gets there, it becomes very hard to justify the valuations. We have a highly bipolar market per se and it is not a sign of a healthy market or a market about to take off into a secular bull run. So, on the whole, it makes sense to look for opportunities to trade into the rise in the market and then maybe get back. To me, it still remains largely a trading market and not a secular market. Q: Just in case we do find resistance at 6,000 level, what kind of a pullback should investors or traders expect? Can bottom for the markets be around 5,500 mark and that is where traders should enter in or perhaps even lower levels are in store? A: A range of 5,500 to 6,000 is something we have seen time and again. So saying that the market could go down to 5,500 is a fairly safe bet but if one looks at it from valuation perspective, if the market were to go to 12 times P/E multiples- it could easily see a level of 5,000 or 4,800 levels. Hence, those levels do remain a possibility because we are very dependent on flows. So, if we have a few months of flows going out, we will be back at those levels once again. Q: What would you watch out for in the result season in terms of positive surprises? A: I think positive surprises are going to come from the export oriented sectors in fact I think one may not get too many in the result season as a whole. It is also important to watch out for some of the negative surprises which would come which are related to the currency movements as we had sharp currency movements and it is not always possible to hedge one’s exposures completely. Hence, that is something which you will see the impact coming through.