April will most likely be a "wait and watch" period. It can close in positive since the markets are deep in the oversold zone, but for the time being, 7,511 can be taken as a bottom in the intermediate-term, Umesh Mehta, Head of Research, Samco Securities, said in an interview with Moneycontrol’s Kshitij Anand.
edited excerpts:
Q) It was a volatile week for Indian markets, but the good part is we managed to bounce back from 7,511 thanks to the various fiscal measures taken by the government and authorities around the world. What is your take on the market action?
A) In October 2008 when the US Fed had announced a stimulus package, markets rebounded for some time, but thereafter the slide continued. Price destruction was lesser post the stimulus package.
Time-wise it took another 5 months for the market to really begin the bull run. The current actions across the world including lockdowns, stimulus packages, fiscal & monetary incentives will help markets stabilise, but it will take time for markets to enter a new bull orbit. Substantial price correction may not happen, but time correction may happen.
Q) After registering a series on series fall of more than 25 percent in March, what is the sense you are getting for the April series. Do you think we could hopefully close in the positive – what does the data suggest and any stocks which investors should watch/avoid? Have we made a bottom around 7511?
A) April series will be positive given that markets will try and bounce back from oversold levels. As such the lockdown effect will be felt in months to come.
April will most likely be a "wait and watch" period. It can close in positive since the markets are deep in the oversold zone, but for the time being, 7,511 can be taken as a bottom in the intermediate-term.
Q) What are your thoughts on the package announced by the government and RBI? Do you think these are enough to cushion the economic impact of COVID-19 on investors and citizens?
A) The package announced by the government addressed the bottom of the pyramid i.e. 20 percent economic interest; however, 80 percent of the economic interest has not been touched upon.
It is here where the slowdown will have an impact, least to say RBI has only allowed postponement of interest/ loan repayment by 3 months, nonetheless, they will have to be paid.
Therefore, as such government in the name of welfare policies has helped the weaker economic population, but MSMEs, entrepreneurs, businessmen - large & small, organized workforce are left on their own.
Q) How is the month of April likely to pan out for investors? Do you we could well get past 10,000 on the Nifty?
A) April may turn out to be a sucker’s rally where the fence-sitters will be pulled in. We will see some amount of price stabilizing but a major rally to go past 10,000 on the Nifty is less likely.
Q) Any 3-5 stocks which are looking good buys amid the announcements made by the govt.?
A) As such announcements will not have a direct impact on companies, but the Financials sector will get respite.
The RBI has in a way relaxed conditions for NPAs, therefore financials space will stabilize going forward. We would wait for some more time to assess the actual impact of Coronavirus on businesses before suggesting particular stocks for long term investment.
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