Anil Singhvi of Ican sees market tumbling 5-10%

Expecting a 5-10% correction in the market, Anil Singhvi, chairman of Ican Investment Advisors says corporate profitability will be under serious strain. "We see high volatility in global markets," he told CNBC-TV18 in an exclusive interview.

He also feels India's gross domestic product will grow only 7-7.5% in fiscal year 2012, as against the Reserve Bank's projection of 8.5%. On the policy front, Singhvi believes that the Mining Bill is badly drafted and hopes it doesn't pass through. He also feels there is complete political inertia and says that coalition governments are likely to stay. Talking specifically on preferable stock and sector picks, he sees huge pressure on margins of cement companies, "as the market has become highly competitive". Also, he doesn't see any merit in merging ACC and Gujarat Ambuja. Reliance Industries has disappointed by delivering lower than expected gas production, according to him. The stock he says will suffer till there is more clarity on gas pricing and production.
Below is a transcript of Anil Singhvi's exclusive interview with CNBC-TV18. Also watch the accompanying video. Q: How are you feeling about the index? Do you think it is likely to go closer to 5,000 levels in the fall or take out 6,000 on the way up? A: The corporate profitability will be under serious strain on account of high inflation whether it is commodities or wage inflation or high cost of interest. We are not going through that phase of very high growth in economy. The growth in the economy otherwise would have taken care of all inflationary pressures. Hence, when you are caught up into a scenario of GDP growth of 7-7.5%, high inflation and low growth, corporate profitability will be under serious margin erosion. I am not looking for the stock markets to really do well today. In fact, I expect there could be a 5% to 10% correction from where we are today. Hence, if you take the Nifty my best case is 5,000-5,200 levels and I am not onto 6,000 levels. Q: Performances between stocks and sectors have been very disparate. If the Nifty were to drift from here or drift lower which sectors do you think can actually generate a lot of return from stocks even with the index remaining stagnant? A: I don