Mkt euphoria to persist; may hit 6K today: Pashupati Advani

Pashupati Advani of NBIE believes euphoria prevailing in the market right now will continue for some more time. “The futures have already crossed 6,000. I would assume that we are going to be there today,” he told CNBC-TV18 in an interview.

Below is a verbatim transcript: Q: It looks like we will start with the gap up this morning but what kind of upside do you see in the near-term? A: This euphoria will continue. This is one big event that everyone was waiting for. They will see whether US money starts coming in, which if we have a good January, should start early next week if not before. It will be a good start to the year.
  
Q: With what kind of upside, is this going to be the run that is taking market to a new high? A: It looks like it might. The futures have already crossed 6,000 so I would assume that we are going to be there today. Hopefully we will close over 6,000 and then move. I would assume it would happen either later this week or maybe early next week for sure. Q: What kind of impact do you think is just the resolution of the issue because it is not a complete clearing of the problem but just a resolution will do in terms of liquidity flows, will it keep it as reverse as it has been through the last few months? A: I would certainly hope so. The problem in the United States (US) is that the Republicans and Democrats are equally balanced in the houses. The fact is that their positions are quite dramatically opposite. They have to resolve a lot of their nitty-gritty in terms of the spending -- I think the spending cuts are going to be important -- they will use the media and they will ask to shoot trial balloons as to what their programmes are going to be and it will evolve. I guess our politicians could certainly teach them a couple of things about the way they are doing things. _PAGEBREAK_ Q: Do you think fiscal cliff will trigger off or can unleash a global rally which extends through January or could it be just a few days with a powerful relief rally and then people will once again go back to fretting about the deals which need to get cleared between now and March? A: This is a reverse of buy on news, sell on rumours i.e. buy on rumours, sell on news. This does give an indication that there will be more liquidity in the market. We were open yesterday, everybody else was close. Asia is up 1.5-2 percent, we were up almost 1 percent yesterday. We will have little less up today than rest of them. I definitely see new flows and a lot of optimism in the market simply because this is one event, which was hanging as a sword and is now pretty much over. It will be put to bed as soon as this vote for fiscal cliff goes through. Q: The suggestion though seems to be that it is going to be meandering to the fiscal issue rather than a resolution of the cliff. So there is a moratorium come February and then March. Do you think that could put a cap on performance and on the premise that most people were working with which was that the first two months were going to be fantastic for the market because this could add to the volatility? A: It could. I think the US is going to be talking about spending cuts, which is the real issue. I do not think there is very much they can cut but they have to cut. There is going to be howls and screams and they are going to make it look difficult. I think both parties i.e. Republicans and Democrats would probably see that cutting is required because you have to make some attempt to try and balance the Budget and by lowering taxes or lowering tax collections, you are going to put some stress on the system. It also means that they will be printing more money, a lot of that money is overseas. A lot of US corporates have money overseas and they will be looking for acquisitions. I think it is good for emerging markets (EMs), it is certainly good for Asia. Q: Would you say not just this but the trend over the last few months has limited the downside for our market? A: I guess so because a lot of money has come in. It seems very illogical for all of it to pour out in one shot. Whatever the reasons there were for it to come in, may be it was an expectation of this fiscal cliff happening at the year-end. It seems to have brought quality money because we are seeing it a little bit in foreign direct investor (FDI) also. The question is how much more is going to come and when? It looks like it will come and we are going to have a good January at least. Q: What about outperformance expectation from the market this year because a lot of people point out given last year’s performance maybe we are someway in the middle of the run in terms of performance not quite the huge outperformer we were in 2012? A: 2012 was a great year because we were up 27 percent plus or minus depending on whether you are looking at the Nifty or the Sensex. It will be nice to be up 27 percent this year. The market is getting a lot of money and will continue to get some money at least for the first half of the year. As long as this momentum is going, life will be fine then everyone will take a step back. At the end of it all, if you take the fast moving consumer goods (FMCG) stocks out of the index, it is not looking that expensive. That will probably attract some fund mangers. It is not that the last time when it went up to 6,100, they (stocks) were at all time highs and the price to earnings ratio (P/Es) was much higher. Q: If you had to pick between the two very influential clusters banking and infrastructure, which one would you plump for, for gains from here? A: Infrastructure is probably more interesting. I would compare it to what DLF has done in 2012 where they have sold assets and pared debt. I can see a lot of special purpose vehicles (SPVs) coming out of these infrastructure companies. We have already seen it happening in some of them and their balance sheets are going to look a lot better in 2013. That is probably a way to look. There is stimulus from the government to get spending going. So that will also help. Definitely infrastructure is better than banking for me.