Nifty to hit 4900 on poor macros; NBFCs attractive: Alchemy

The recent pullback seen the market was entirely due to short covering and given the way Indian’s macros are shaping up, one should not be surprised if Nifty hits 4900 going ahead, cautions Hiren Ved, Director & CIO Alchemy Capital, whose views come in line with Ridham Desai of Morgan Stanley. The market is likely to remain in a sideways range till the next Reserve Bank of India (RBI) monetary policy, which is scheduled in September, he told CNBC-TV18.

August F&O series expiry is just around the corner. According to him, unwinding of arbitrage will keep the market under pressure ahead of expiry. “There may be a large arbitrage and if that doesn’t rollover to the next series, it might have to be unwound and that could bring some pressure. This expiry would be a little bit difficult and there are a lot of shorts in the system as well,” he explained. In the current volatile market condition, Ved is selectively buying technology and financial stocks. He is bullish on midcap IT companies and expects volume growth in these companies to return. IT stocks are in for major upgrades ahead of earnings, he added. Meanwhile, Alchemy Capital holds no position in Hexaware. One can consider investing in NBFCs, as they have now corrected to attractive levels, he added. Below is the edited transcript of Hiren Ved’s interview with CNBC-TV18 Q: Will it really be a good morning for stocks. We have got negative foreign institutional investors (FIIs) numbers and we have got crude at USD 111 per bbl. What’s today, does all this good cheer of the last three days break? A: We are still in a sideways in the market. So, between now and September, till Reserve Bank of India (RBI) meeting, market is not going to be directionless. Every few months we have one macro figure, which everybody looks at and this time it’s the rupee. But if you go by past experience, when there is too much focus on a single macro economic variable, over a period of time, it seems to be a risk. I guess that we are in that mode right now where everyday in the morning we say where is the dollar-rupee at. Q: It looks like today would be another down day, do you think that there is a very good chance that in this expiry, we may break that 5,300 and go below? A: It is difficult to take a call what will happen in the very short-term because there could be technical factors. There could be a large arbitrage and if that doesn’t rollover to the next series, it might have to be unwound which could bring some pressure. This expiry would be a little bit difficult. There are a lot of shorts in the system. There could be pressure because unwinding in arbitrage markets could put pressure on cash markets. Q: In the last three days when we have seen green ticks and some substantial gains. We have seen negative FII numbers every single day. So, would it mean that the bulls may not have the fire power to stay? A: In the last three days, the market could have been in the green because it was heavily oversold. One could also see some short covering, which happened because one did see the rupee come back from the absolute lows as well. The rupee closed lower yesterday. So, if you are talking about the very short-term maybe you could have a down day today.