'Investors unexcited about new high, still looking to sell'

The Sensex has touched an all time high, but one is not sure if this would result in participation from retail investors, who have sitting on sidelines for quite sometime now, says Raamdeo Agarwal, Joint MD, Motilal Oswal Financial Services.

Other asset classes like gold and realty are flat and even the fixed income side of the market looks dicey, still they not looking to allocate even 5-10-15 percent to equities, he told CNBC-TV18 in an interview. The sense that prevails among retail investors is to book out of the market at 6,200, he added. Meanwhile, he sees a sell-off post election results. As of now, he does not recommend selling beaten down sectors. Also Read: DII redemptions to continue; BoB, OBC top bets, says Religare Below is the edited transcript of Raamdeo Agarwal’s interview with CNBC-TV18 Q: How are you feeling about the market this morning? A: I am hearing a lot of noise from the media rather than from investors. Few investors are hooked on to the stock market, but you will be surprise to see how much retail investors have withdrawn. I do not know whether they will come back once it gets into the new high. This is surprising. I have seen almost three cycles and in this cycle when you are breaking out to new high, the kind of apathy I see among the retail investors in India is almost total. However, that is a different part of it, but good thing is that all the good performances so far has been rewarded, of course at a market level we had lot of volatility, lot of surprises. Whenever you think that market is going to new high, it use to bang on, it will go down by 500-700 points and the political change, which is knocking the door is big this time. Q: Do you sense that this apathy will begin to wane or do you sense that people are feeling left out or they have completely switched off. You talk to so many retail and high net worth individual (HNI) people. In the last couple of weeks when the market has made this run to almost a new high, do you see a lot of people with that spirit of enquiry or are they still completely withdrawn? A: Till now it is very withdrawn kind of thing. I am talking about till yesterday evening. I have still not got any phone calls from typical guys who get excited when the market starts going to new high, market becomes a buzz; nobody is asking what to buy, whether to get into the market, these are all false rallies, these are liquidity rallies, this is because of foreigners have gone back, Bernanke is pumping liquidity. One is still not getting the faith that good companies have been rewarded, corporate performance is better in this quarter, economy after three-four years is turning around and so let’s start looking at some stocks; gold is flat, real estate is flat, fixed income is dicey so let’s start looking at 5-10-15 percent allocation to the equities. No, that’s not the kind of sense. However, still the sense is that at 6,200 let us get out. So, that’s the kind of mood that retail has today. Q: You were talking about elections and it is interesting going into 2014, four of the five fragile economies Brazil, Indonesia, India and South Africa are all going into general elections and statistics show that generally emerging market equities have huge run pre elections, not so much for developed markets. Are you getting the sense that we have got enough steam to keep running into the event or do you think the market may be overreaching itself, a lot of the good news or expected good news is priced in right now and the market may tend to fizzle a little bit going into the event? A: I feel some pricing is already coming in because of elections results. Results will come out on December 8, but market is not going to wait still that time to reach wherever they want to reach. My sense is sometime in the middle of November, the market will make a view of the outcome of result and we might see some kind of selloff. Now the mood is building up for state election results.