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Last Updated : Aug 13, 2015 12:58 PM IST | Source: CNBC-TV18

Buy 'unique story' India; no let up in INR fall: Edelweiss

Despite the recent market fall, Vikas Khemani, CEO, Edelweiss Securities, says India has a unique story and these kinds of falls or dips should be used definitely as an opportunity to build equity play portfolio from a medium-to-long-term perspective


The sudden market weakness can be attributed to China, policy logjam (GST) and the slow pickup in the earnings cycle, says Vikas Khemani, CEO, Edelweiss Securities.


However, he says India has a unique story and these kinds of falls or dips should be used definitely as an opportunity to build equity play portfolio from a medium-to-long-term perspective.


Below is the verbatim transcript of Vikas Khemani’s interview with Ekta Batra & Anuj Singhal on CNBC-TV18.

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Anuj: What have you made of this recent bout of weakness that has again come back into our markets? Do you think it was a bit of an aberration because of what happened to China or is there something more to it and would you be cautious on the market at current levels?


A: Multiple things can be assigned to it – one obviously the trigger was China factor and that led to the sudden sort of sharp correction. Also, I think what is happening in the parliament where there was a hope that probably GST will get passed and what we saw was it is not happening, so in the absence of this now with the result (earnings) season over, most of the markets were looking a bit heavy and on the top of it this sort of China issue has come about so it has led to some sort of correction.


I don’t think it is a start of some major correction cycle. India has a unique story in play and these kinds of falls or dips should be used definitely as an opportunity to build equity play portfolio from a medium-to-long-term perspective. Because the macro indicators, all the drivers of growth all are in place and we will soon see corporate earnings picking up, which will drive the markets from here on.


Ekta: How worried are you about the rupee depreciation or do you think that because of the fact that we have been largely resilient since 2013 this depreciation was expected?


A: If you look at rupee, it has been one of the strong currencies as compared to most of the emerging market currency. Our view on the currency has been that rupee will continue to depreciate albeit at the moderate pace given the kind of flows we have. If this kind of development what happened in China happens you will see rupee getting adjusted to it. If dollar continues to remain strong and as the US recovery comes, US dollar will become strong, so you will see rupee kind of also depreciating because of that.


You will see rupee depreciation as an ongoing phenomena, I don’t think it is going to change. Whether it happens in orderly fashion or this kind of in orderly fashion is the only thing which can’t be said but rupee will continue to depreciate. Some pockets of the markets are not good but it is very good for export oriented stories, IT and other manufacturing led exports.


While it is not so good from the input perspective for businesses which are depended on input so net-net it is not going to be a major impact on the economy. According to me as long as it happens in orderly fashion and as long as it is in the range of three- five percent and which I think is the kind of trajectory we should see in the next few years.


Anuj: Would you say that IT and pharma might be good players to get back into. They were the erstwhile leaders then we had decent correction and now were the last few days clear signs of money shifting back to in IT and pharma?


A: I can’t comment on the trading perspective. IT and pharma are solid businesses. They are good businesses and they have been doing well in quite some time and continue to do well because India has an export story, in play and can’t be ruled out. India is one of the unique market where you will have export plays and domestic consumption play and both of them are very solid place. So, anybody who is looking to build the portfolio cannot say that I will be only in this basket or this basket I think one has to have balanced portfolio.


Good part about it is that both, kind of, in some sense may build some sort of natural hedge for these kind of sharp kneejerk reactions. If you look at over a longer period of time both ends up giving good superior returns. Any business can react badly to this kind of short-term reaction. However, over a period of time you kind of adjust to this kind of moment because the direction which we are walking is very clear. So, investors will have to according to me play both basket you can’t play one versus other.



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First Published on Aug 13, 2015 11:50 am
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