Mkt reacting to data and news flow: Blackridge Capital

In an interview to CNBC-TV18, Arindam Ghosh, MD & CEO, Blackridge Capital Advisors spoke about the volatility returning to the data. He also speaks on the impact of economic data on the bourses.

Below is the edited transcript of his interview with CNBC-TV18: Q: It was a great start to the July series. Unfortunately it didn’t last long and we now seem to be getting back to the pre-expiry volatility levels that we were seeing. So, what is the story here, do you see this as the norm as for now at least? A: Markets have been reacting to data and newsflow, escalation of geopolitical risk in Egypt have actually seen the crude crossing the USD 100 per barrel mark. We have also seen the data from non-service purchasing managers index (PMI) from China also being weak. So, overall the investor sentiment continues to remain weak and while market valuations may actually appear to be fair there may not be enough reasons for global investors to increase fresh allocations to equity at this point in time. Q: Earnings season approaching what are you expectations at this point then? A: Expectations at best are muted. Given what we have seen in the previous quarters the overall environment continues to remain extremely challenging. Hence, sequentially we expect very flat quarter-on-quarter (QoQ) growth. Q: Talking about earnings season, Infosys is about to kickstart earnings season and considering the rupee volatility and the brokerage opinion that has come in on Infosys do you expect a weak set of numbers at least guidance from Infosys? A: Our sense is overall whilst one of the biggest beneficiaries of falling currency has been the IT sector. Going forward we are a little cautious on how the sector is going to play out. Also, given the fact that we have seen the bulk of the rupee depreciation happening, from hereon we probably would see money kind of rotating from IT and going into some of the other beaten down sectors and stocks. Q: Anything that you are bullish on at this point? High beta names like some realty stocks, some metals stocks have seen a beating down over the last couple of days. Any picks from that space or maybe from the banking space as well? A: From a stocks specific point of view, there are quite a few stocks which from these levels appear attractive in terms of valuations. However, our sense is that market is clearly in a consolidation mode and therefore in an environment where investor sentiment is largely weak one would like to wait and watch and play out and perhaps do a bit of fence-sitting at this point in time till there is further stability in the market.