Don't see mkt going anywhere now; like Bharat Forge: Dipen

Indian investors understand that a ground level change is happening in this country, which may or may not get necessarily reflected in IIP or other macros, says Dipen Sheth of HDFC Securities. This is a fundamental, structural, basic change that is happening in this country, he says.

But the world is slowing down and the US Federal Reserve is perhaps going to hike in December, so the markets will perhaps go nowhere for a while and that is okay, he told CNBC-TV18.

He believes the public sector banks (PSU) can look like a good turnaround story in 4-5 years.Below is the verbatim transcript of Dipen Sheth\\'s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Sonia: It has been a couple of good days for the market but that is because we have seen a lot of buying coming from the domestic institutions. Do you think that positive sentiment will continue even if we don’t get any major positive from the parliament session?A: It is not just a two-day phenomenon. Let us get things in a better perspective here. So if you go back all the way to 6-7 years ago till FY09, this is probably the first year that foreign institutional investors (FIIs) have pulled out a significant amount of money on a net basis from our markets. The last number known to me is little more than Rs 17,000 crore and the market is down some 7 percent in the trailing year or year-to-date (YTD) or something. The domestic guys have put in 3.5 times plus this amount, Rs 60,000 crore again an unprecedented number and you are excited with what has happened in the last two days.So let us get a fix on this phenomenon. It is very clear, Indian investors are voting with their feet, they understand that there is a ground level change happening in this country. It is not necessarily reflected in the index of industrial production (IIP) and business confidence and stuff like that right now, it will reflect over a period of time. We are taking all the right medicine.Again if I get back to medical parlance, it is only a matter of time before the patient begins to do much better. People are figuring out. This is a fundamental, structural basic change, which is happening in the country. I am completely hopeful that we are going to become unrecognisably different in a decade from now but then we are creatures of the market and the world is slowing down and the Fed is going to hike rates in December is the consensus view, so the markets will go nowhere for a while and I am okay with that. It gives me a lot of time to study and figure out what is worth buying.Latha: There is a bunch of good news coming for public sector banks. They were surprisingly the supporters of the market in the previous contract. As an index, they rose about 2 percent where the Nifty itself was down about minus 2.8 or thereabouts. So are you beginning to nibble at that sector?A: Absolutely. So public sector banks have had nothing going for them for quite some time and I don’t need to tell you about their stressed asset position, about their tottering capital adequacy and about the fact that they are generally perceived to be inferior cousins of their private sector pack and all with good reasons.When the tide changes, you need to figure out how and why the tide is changing and the tide is changing simply because of the way the government is working and it will change over a period of time. There is a lot more work to be done. So I am not going to go out and say, each and every public sector bank is worth buying today. However, I will soon expect to see the bankruptcy code out there, a proper bankruptcy bill or a law in force, before that I will expect to see that some of the errant borrowers are going to be chased by the law in a way that helps liquidate their assets and some of that is playing out.Even the private sector banks are forcing some of the large corporates to engage in asset sales and so on. I think a couple of large public sector banks have seen change in leadership. I must say accompanied by bad news internally, so you look at what is happening with Bank of Baroda. You have a shining star from the private sector environment taking it over and at the same time a little bit of a scam breaks out in the daily geography.So I think we are in a process of churn and evolution. In two-five years from now, maybe we will have a lot more regard and respect for the public sector banks. At that point of time, would you want to be in that space?More to come...