Global cues, elections key; IT sector to lead mkt: Dalal

Just like other market commentators, Amit Dalal, ED, Tata Investment Corporation too thinks global factors and general elections in India will be key trigger for market going forward.

However, he is worried about G-Sec rate in India and the fact that it is not going below 9 percent. Liquidity has been key factor for the market movement so far and if in any case it does not improve or worsens then the market is sure to be nervous about that, says Amit in an interview to CNBC-TV18.

IT sector he believes will continue to lead the market.

Below is the verbatim transcript of his interview on CNBC-TV18

Q: What is the call on the market now, we have seen too much volatility, we had a one way rally from 5,200 to 6,200 then we had that big correction and now an almost equally sharp pullback, where are you positioned on the market right now, are you confused or are you convinced that we are in a bull market?

A: I think the way I look at the market is that there are two factors, which one should continuously review. One is what is happening on Wall Street and what are the words being spoken by the people concerned over there like last week it was a positive statement made by Janet Yellen that taper might happen later. Yesterday Bernanke too said that perhaps they will move to USD 70 billion and markets were little subdued. So to a large extent what is spoken there and the way the trend is over there is going to influence global markets right now.

Where our markets are concerned, I think we are in for a very important 2-3 weeks where you have the election results coming in some states and I think those are the two material factors that one should keep considering.

The thing that dampens my spirit every time I look at number is the 10-year G-Sec rate in India - the pressure on the money supply, the fact that it doesn’t go down below 9 percent, that is something that plays on my mind and I hope that that situation improves. Therein lies the real joker in the pack to this move that has taken place in the market - if liquidity does not improve or it worsens that is something market will feel very nervous about.

Q: The good news is that within all this volatility there is a lot of money to be made in individual stocks, so if you look at the last couple of months, you have seen names like Tata Steel, Larsen and Toubro (L&T), Maruti yield some good returns for investors. From now until the next three-four months any kind of ideas that you would have up your sleeves either sector wise or even stock wise?

A: We cannot discuss stocks over here. The main thing is that you have to assume that this volatility brings with it a churn, which gives you an opportunity to invest in other stocks also, which have been dampened for a very long time.

However, the leadership I don’t think will change -the leadership of the companies and sectors which were there for the last couple of months from 5,200 to 6,200 Nifty levels. However, the money that is made from that leadership will translate to confidence of revaluing. Some of the other companies, which have shown good results and in this quarter as you know quite a few companies have shown far better results than what was expected. So I think there is a definite confidence building that is coming in the second tier of stocks also.

Q: What about IT? Do you think the exports story can continue here? We have seen quite a bit of recovery in the US data as well.

A: Absolutely. IT will remain a leadership sector. The two uncertainties which were there in terms of both large and midcap IT - one was US demand and second of course was Europe recovery, both these markets have started showing very good traction.

So I believe that the full uncertainty of job security, which was there which the politicians faced in United States that uncertainty and the political problem in itself has diminished to a large extent. You already are at 7.5 percent unemployment in United States. So they have reoriented their economy. Therefore the offshore problem or the offshore legal issues which were there are not going to weigh up on these companies anymore.