Parliament's retail FDI push can trigger market: PN Vijay

PN Vijay, Portfolio Manager, askpnvijay.com, says that the Parliament is capable to give a substantial trigger to the market. If FDI in retail is passed then retail investors will have confidence in the government. 

Also read: Goldman upgrades India to 'overweight'; sees recovery ahead Below is the edited transcript of his interview to CNBC-TV18. Q: What should the market expect from the Parliament over the next couple of days, how do you see events panning out and how trigger can it provide?
A: The Parliament is capable to give a substantial trigger to the market. If FDI in retail is passed then retail investors will have confidence in the government. In September, the government raised petrol price by good amount, announced FDI in aviation and retail.
The government managed the first two but lost Mamata Banerjee on the bargain. If the government is able to pull off with its commitments then it will be a tremendous moral booster for the domestic investor. In this calander year, despite rupee depreciation foreign investors has been pouring in money which indicates that they have lost perception that there would be a turnaround in a year's time with the interest rates bottoming out and investment to GDP ratio picking up.
On the other hand, domestic investor has been very shy. They have been selling equity mutual funds months after month. The HNIs are still very reluctant to add money to the equities. In this scenario, if the Parliament does give Manmohan Singh a boost up, that would be adrenalin for the market at least for December. Q: What do you think will be the priority in getting the bill passed because the market wants more information on banking regulation and taxation. What do you think will be top on their priority?
A: There are some important economic Bills which the government should pass like the insurance Bill, banking Bill, companies Bill, pension Bill and land Bill. Land Bill is of upmost important and has a very deep significance on socio-economic front. Ideally, the government should get all the Bill passed.
The government may face big obstacle to pass insurance bill as there is tangible difference in norms. The government should increase the percentage for FDI from 26 percent to 49 percent. This would be a huge relief for the market. There is no significant political point on other economic legislations like pension and banking regulations. The government is hoping to slip these issues through when the winter session begins.        Q: In November series, Bharti has been a surprise pack, largecap added 20 percent and it took many people by surprise, would you back it even from here?
A: Bharti is a clear case of investment buying. People are seeing some fundamental change in the telecom industry due to two reasons. First, cancellation of some licenses has taken place and Indian telecom market is moving like the US market way where there are only 3-4 players who in a type have a little bit of monopsony on the industry. The 2G auction was a dismal failure for the government but it was good for the operators because paying for the spectrum is their main capital investment and when it becomes lesser ROC improves. Considering these factors, long-term investors like the FIIs are buying.  
I will not buy Bharti for more than Rs 320 levels. Wherever the beta is above 1.1 or 1.15, people will take position to make up. So, Bharti may not fall. It will soon reach a level of disinterest but I think this blue chip has cme back into the reckoning. It is also good for the index.  Q: Aviation has been another dark horse sector, good time to start looking at those stocks or is this entire investor buy rally done on things like SpiceJet and Jet?
A: The rally did not start after the FDI in civil aviation was announced. There was some spike but after that people have written it off and then two major companies come up at the point of clinching deals. Many midcaps have seen deals like United Spirits, SpiceJet and Jet Airways.
If these two investments go through, then it would be advisable to buy Jet Airways and SpiceJet on decline because the whole ballgame for these airlines would change.