Earnings a big trigger for market: Bhanshali

With regards to Brexit, he says, if it happens the market may not react too much because the news is already discounted.Below is the verbatim transcript of Vallabh Bhansali's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Sonia: The market seems to have taken the bad news in its stride for now. But in the slightly medium-term, how worried would you be about governor Rajan's exit?A: I would look at the future and one has to take the day at a time and that is how I would look at it. It is a very complex situation where India has been a solid story. It has been slow. Then there are a lot of global factors. Dr Rajan chose to announce his retirement months before it was due. So we don’t know what played out. He is a fabulous man and I would miss him. However, I believe the country and the institution go on and as an investor who has been investing for many years in several stocks, you take it all in your stride and that is what the world will do.Latha: What according to you would be the medium-term worries? As you said in the near-term, it is a lot of global issues that the market will have to deal with, fund flows, India's growth story being much better than several other emerging markets but in the medium-term, do you think long only investors will worry about both India's inability to keep top talent as well whether some of the legacies of Rajan like inflation targeting maybe given up?A: I think whole Reserve Bank saga has been very good since 1992 but since then I think governor after governor have shown fairly good bit of attitude, rectitude and Dr Rajan being one of the most brilliant academics that we have in the world, showed a lot of character and a different perspective on how the governor should be run. So it has been quite heady but I would take a more sober view and if I look at right from the period of Dr Bimal Jalan for that matter, Dr Reddy -- when Dr Subba Rao came to be the governor, people thought that here is somebody who is a bureaucrat who listens to Delhi and there were feeling pleased as a punch but I think the punch was different. So I think it all plays out, the governors have shown fair bit of independence generally in the past. Some governors do well in some areas, some governors do well in some other areas, so I would say, I don’t want to become too pessimistic even if I continue to miss Dr Rajan.Latha: We were making the point about the medium-term with Udayan Mukherjee and he expressed it very well that individuals do matter even if the RBI is an extremely vulnerable institution. The question he put was would our perception be the same if the cabinet was led by Rajnath Singh instead of Narendra Modi. There is so much of an equity with the Prime Minister today, likewise, would there not be in the medium-term worries about whether Rajan can be replaced by anyone of equal merit, especially if we see a currency turmoil in the days to come, either because of the Fed rate hike or any other currency reasons?A: I think life has to be looked at in totality. We have all kinds of losses. I have seen Mrs Indira Gandhi passed away, I have seen Rajiv Gandhi being assassinated, we have seen so many calamities of political, social and all kinds so I think one has to put these things in perspective. If we take a conjectural view, of course we are trying to put words in somebody's mouth, so I want to avoid that situation.Indeed when competent people or when personal and dear ones depart, you feel sad about it but that is not the end of the world. I think the point is not about whether Dr Rajan was an exceptional person but the point is about what happens next. I think we have to see as it plays out and if those who have a long-term view of things, we will learn to take this in stride, the market is the longest term of all the institutions and the markets will take this in stride and they seem to have reacted in a similar manner.Anuj: Do you think that with monsoon picking up and with the news that earnings should pick up, we saw the evidence of that in last quarter's second half with green shoots emerging, do you get a sense that this market over the next six months will seek much higher levels?A: I think earnings will be the most important. The market has been waiting for earnings to grow and I think now is the time that with the monsoon if you see the demand pattern and change, earnings will be most important in the medium-term and of course one believes that the rupee swap etc has been planned and taken care of, so that would be the second thing.I believe on both fronts, we look good but we are a quarter-to-quarter (Q-o-Q) market so we have to see as things play out. Next quarter is indeed important.Sonia: How important is the Brexit as a trigger for the market? Now the odds are in favour for the Brexit, not taking places but even if it does, do you think that will also be a good buying opportunity for long-term investors?A: If the market reacts. Market may not react at all because this has been played out for such a long time, the market seems to discounting in advance so the blip at all, if it comes maybe very short-term and indeed every dip, the good guys have been buying.