Blackridge expects another 10-12% fall in Bank Nifty

The market on Tuesday witnessed a freefall with the Sensex and the Nifty shedding around three percent each. The rupee also breached 66/USD mark to reach an all-time low of 66.07/USD.

Analysts see a further correction of 10-12 percent on the Bank Nifty. Arindam Ghosh, MD&CEO of Blackridge Capital Advisors told CNBC-TV18 that India’s macro situation is worsening due to increasing geopolitical tension. He also expects the banking stocks to be under pressure for some time. He feels that tapering of monthly bond buying programme by the US central bank should take place in September and relieve EMs from further volatility. Also read: Fed should get QE tapering done; see better '14: JPMorgan Below is the edited transcript of his interview to CNBC-TV18. Q: Is it the rupee or is it fear of downgrade post the policy action on the food bill from the government in the parliament last night? A: It is a mix of both. It is due to further intensifying of global risk aversion for emerging markets which is leading to the selloff driven largely by currencies, which have been falling. It is escalating geopolitical tension and worsening India’s macro. Q: How are you reading the global situation? There is still no clarity on quantitative easing (QE) withdrawal. There is Syria to contend with as well. A: QE is expected to happen in September. We would see some stability coming into the market. In the interest of the emerging markets QE should happen in September. For any reason it gets pushed to December or beyond, the market is going to remain extremely volatile and choppy. The sooner it gets out of our way the better it will be for emerging markets. Q: How would you approach the banking space? From the highs of 13,000 in May, it is about 9,000 levels. It seems to be the hardest in the recent bear market. A: That was on expected lines. The foreign institutional investors (FII) selling was expected to gravitate towards some of the largecap stocks, which we have seen on Tuesday after the kind of capitulation we have seen in the broader market. So, probably market is going to turn a lot worse before some kind of stability will get restored. We expect the index to correct from here by another 10-12 percent. So, the downward pressure on the index seems to be pretty strong at this point in time. Whether it is banking, some of the good names that has been the preferred shelter, all of them would come under pressure. Q: The IT pack has continued its outperformance there. Even on a day like Tuesday, some stocks like Tata Consultancy Services (TCS) and Infosys are up more than a percent. How would you approach IT stocks? A: Something is getting sold and bought. So, in a situation where you have the rupee virtually on a freefall probably that is the only refuge right now. So, what we are seeing is more out of a reaction than fundamentals at this point in time.