The current market correction is more tactical in nature than structural, said Sanjay Sinha, Founder, Citrus Advisors. Even though domestic performances have not been supportive and there is lack of too many positive triggers over the next 3-4 months, Sinha believes the market has good opportunities for long-term investors.
He advises buying engineering and auto at current levels and feels the rural demand could be under pressure in case of poor monsoons.
Below is the transcript of Sanjay Sinha’s interview with CNBC-TV18\\'s Anuj Singhal and Ekta Batra.
Anuj: The market had to endure a really torrid period over the last one or two months but do you think it is time to buy now or do you think maybe there will be better prices over the next one or two months?A: That will depend as to what is your perspective because the market is made up of three types of participants. There are the traders who like to play intraday and then there are the speculators who like to trade for a few days and then there are investors. So if you are a trader or a speculator there is a very strong possibility that you might lose your shirt in the next few weeks but if you are an investor the market is going to create that so called perfect bottom between now and the next three months at best and that could be at levels which would be lower than the current levels.
Ekta: In your sense how correlated are we in terms of what is happening in the global market, say for example how crucial would be the nonfarm payrolls data for the Indian markets?A: We are today at an unfortunate situation where the negatives have converged together for the Indian market. We have a long list of headwinds as far as the global markets are concerned. We would had been in a very happy position if the domestic corporate performances have started improving and that would had acted as a buffer for these Fed rate hike which eventually has to happen.Unfortunately the domestic performances have not been very supportive and the actual Fed rate as and when it happens, may be it will happen in September, maybe it will happen between September to December. The readjustment of the capital from the emerging markets to the other markets of the world will not wait for the actual Fed rate hike, it will actually precede that and that is why anticipate that the next three four months are a period in which we do not have a lot of positives to be looking up from the Indian markets. The corporate performances in this quarter are no great shakes. The optimism that they will be very good in the first quarter in the financial year 2016 would also not be there.So, the Friday data on the payroll at best can probably raise the expectation that the Fed rate hike might not happen in the September, it might happen say, between September and December, but that is not going to be a big support toi the market.
Anuj: What pocket of the market looks best to you now because we have seen a secular correction. It started with IT, we had banks falling, even pharma fell. Almost everything has fallen and it has come off at least 10-20 percent from the recent highs. In certain cases even 30-40 percent. What pockets are best value right now?
A: If we have to make sectoral choices it is unfortunate that the pharma and IT pack which had kept the market up also collapsed in the last one month. Going forward what I see is this correction in the market is not a structural correction. It is more of a tactical correction, more to do with the fact that we have too many negatives building up together. Beyond that we have a very strong Indian outlook that is going to be developing and that outlook may get more upswings from the rate sensitive sectors of the economy and not so much from the other defensives but having said that low portfolios can be weighted only in one direction.So, therefore I still feel that one should buy into the weaknesses that is developing in the engineering, capital goods, banking, auto space and weather the storm and wait for an upswing which is going to come beyond that because in financial investment as long as the volatility is compensated by a fairly high return it should be a justifiable investment and the returns will be quite fantastic after this period of about four to six months.
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