See delayed reaction from market on recent reforms: Antique

Continuing its reform agenda, the Union Cabinet cleared the long-pending Land Acquisition Bill and the urea investment policy on Thursday. CNBC-TV18 spoke to Kirti Doshi of Antique Stock Broking to get his views on how the market perceives the resurgent UPA government and the road ahead.

Doshi said that implementation of these policies may take another three to six months. "Markets seem to react to these policies only after they find the reforms transforming into real businesses and being executed at the ground level," he said. Below is an edited transcript of Kirti Doshi's interview on CNBC-TV18 Q: No great euphoric reaction on the passage of the bills yesterday. Do you go with the market reaction that maybe the cabinet committee on infrastructure may not deliver what the NIB had promised?
A: Both yes and no. The implementation programme may take another three to six months. But whenever this kind of policy has been announced in the past, whether it was digitalization bill or foreign direct investment (FDI) in retail, market has a habit to see, whether it is transforming into real businesses and actually executing on the ground and only then they react.
In the Digitalization Bill too, nothing happened to the media sector for almost three-five months and when the ground reality things started happening, the rest is history. Almost all the stocks, all the distribution companies are two-three times up in the last eight-ten months.

Q: Securities and Exchange Board of India (SEBI) also came out with some changes yesterday, instructing exchanges not to accept orders greater than Rs 10 crore. Did you see anything dramatic in those recommendations or changes?
A: From the announcements that came yesterday, some of them are good for the compliance related. Earlier, market fell drastically on the Emkay transaction which has been executed. But, SEBI’s Rs 10 crore transaction limit will not to be very well appreciated. I am confident exchanges and brokers will represent to SEBI and SEBI will do something on the basis of their recommendations.
We have seen many transactions like HDFC Rs 10,000 crore or Cairn Energy of Rs 3,500 crore. Many large transactions which are happening on the secondary market will require an open window at the time when this kind of a transaction is to be executed. So, something will come out and we will see a correction on SEBI’s Rs 10 crore transaction limit.

Q: What about the Bharti Infratel (BIL) issue today? Do you think it is picking up on the last day?
A: BIL IPO may not create wealth immediately but in the long-term, I am sure this will attract more investors. Currently, its 95 percent of the issues have been subscribed by all large funds out of US and Europe. Hardly a few mutual funds or FIIs based in Asia have not been looked at because there are many other investment opportunities available in the secondary market, well within attractive prices.
Money is limited, but there are too many things available in the market. So, large investors having a view of three-five years might have invested, but not the people who have USD 500 to 1000 million of book size.

Q: What do you think about money interest in the market because there is some caution at this point about where things may be headed? Are you bullish for 2013 and what are your targets for the market?
A: Going back to last one year, from 4500 index till 5900, market has always gone on most of the worries. Whenever market has moved up from 300-500 points in the Nifty, after that, it gets corrected every time. The entire last one year move on the market has been very smooth. It has really given an opportunity to the people who want to enter at the right price.
Since September, after the new Finance Minister took over and announced several measures, we have seen the market moving up by almost 500-600 points on the Nifty. So, this is a part of that correction of 500-600 points on the Nifty. Once it stabilizes around 5750-5800, people will have time and right investment to do and so again the market will have some upside.

Q: What are your big bets for 2013 in terms of themes and stocks?
A: The way this government is sincerely putting their efforts to do the right things which did not happen in last 3.5 years in UPA, because of many reasons like the Coalgate scam or the Lokpak Bill or whether it was the telecom scam. But in the last four-six months, government has started taking steps which will push the economy on the right track.
The measures include yesterday’s announcement of the capital investment burden. If this kind of confidence will come back in infrastructure and on large companies like Coal India, National Thermal Power Corporation (NTPC), Oil and Natural Gas Corporation (ONGC), which are large global size companies that created wealth for investors as well as for the government in 2003-07.
If there will be a right policy and right pricing like the National Mineral Development Corporation (NMDC) issue which the government came out with, attracted a lot of investors. We have seen Rs 10000 crore of the book on NMDC because the price was very encouraging. If this kind of policy and right pricing will happen, 2013 will be the year of Public Sector Undertakings and PSU banks.
I will bet big time if the government follows right policies after announcing the divestment also. This would not be like ONGC which was Rs 300, they announced divestment and after that there was no clear policy on the subsidy sharing formula. That is why the price has fallen and people have not created wealth. With right policies huge wealth can be created in the public sector enterprises and PSU banks and also in these companies which were in the top 50 in the Fortune 500 earlier in 2003-04.