Sandip Shenoy of Pioneer investcorp believes structural bull trend is intact and capital flows will have to return to India since it is the only growth story around.
Chances of Indian equity market bottoming out in the near future cannot be ruled out but danger of making fresh lows would continue to exist, says Sandip Shenoy of Pioneer investcorp. He believes structural bull trend is intact and capital flows will have to return to India since it is the only growth story around. However, global situation will make volatility part and parcel of our market at least for next few quarters, Shenoy said.
Speaking about the fall, Hemant Thukral says rollovers suggest the market getting ready to rebound in two days.
Below is the transcript of Sandeep S Shenoy's interview with Reema Tendulkar and Sonia Shenoy on CNBC-TV18.
Sonia: Is this a market that you should look for buying opportunities in or will you get better levels in the months to come?
A: I have been always of the belief that it was on a sell on bounce back mode and the bounce back was quite there and you have got a good sell-off. It is not to do anything other than technical issues at the current juncture but looking at the situation of the market, we probably could be bottoming out in the next few days but having said that, are we out of the danger zone? No, definitely not, a new bottom could be made, could get again bounces from at the current juncture which could again suck people in. This is more of a painful adjustment happening because of the erratic capital flows towards India. The flows are not going to stop, it is just a pause button at the current juncture but you can imagine what carnage a pause button does to us, so this kind of volatility will become part and parcel of our life at least for a couple of more quarters.
Reema: You said that we will have a gap-down today, things are looking weak for now, if there is a potential bounce back in the course of the next one-two weeks, should that bounce back be now used to sell into the markets, do you expect us to gravitate much lower in the next six-eight months considering the global scare, the deflation worries across the globe and therefore any bounce back in the market should be used to lighten up your position?
A: We still are in a sell on bounce back mode at the current juncture and we could get decent bounces upon that. So it is going to be short sellers market but having said that, there are some pockets of excellence where cash flows are ramping up for some of the large heavyweights or the kingpins of the sector and that is where the money could be flowing in but one should be again mindful of the fact that capital flow towards India is not going to ebb, you have just got a pause button but it is going to come back because India probably is one of the few markets where growth is still being there both on economic side as well as on the corporate earnings side. So yes, we will see a newer low being coming into the market but our structural bull trend is not impacted as of now.
Reema: Which stocks would you recommend buy if we do see a gap down opening today once we do see a gap down?
A: In this kind of a situation it makes more sense to go towards capital conservation strategy rather than trying to outdo the market on an upside. I think the only sector probably which gives you the highest degree of safety at the current juncture is IT. So IT obviously will also have a 2-2.5 percent shave off because of the sheer weightage it has in the entire indices and the markets.
So I think maybe after first fifteen minutes of froth and carnage is over, IT probably could be the only safety zone, of course there are healthcare and auto also could give you some kind of stabilisation but at this kind of a junction don’t try to outdo the market, just move into the capital conservation mode and that is going to be the theme point for at least next few days.
Sonia: Of course there is a big carnage in store today but barring today, what are the themes that you think would outperform going ahead?
A: As I mentioned, we are in a sell-on bounce-back mode, you will get a bounce-back - but even in a bounce-back the structural up-trends of the currency, we are more or less aligned, that we also are going to have a much smaller shock than the other countries, which are going to have. So, in such kind of a situation it makes obvious sense to stick on to currency proxies, which obviously IT comes at the top of the heap. The second would obviously be the healthcare because it has a good amount of leg-room both on domestic as well as the overseas markets. Again if you try to move into a domestic-consumer derivative which is probably unlinked to the stock market sentiment that would be auto. So, other than these three do not try to do any bottom-fishing or catching the falling knife because it could be quite detrimental.
Sonia: What do you do with a stock like Yes Bank? I mean three days of non-stop falls, is there something stock specific or is it just because the trend is on the downside?
A: I think the entire banking sector was over-rated and one should be again looking at the way the public sector undertaking (PSU) banks had got rerated on some kind of a recapitalisation or Indradhanush or whatever you call it. I think it was more of a wave which lifted all of the boats in the sector, but yes, the banking sector which is now the largest component of the entire indices has to undergo a correction because the pain points of the economy are still not over. So, it could be one bank today and another bank tomorrow, but again the ping-pong is going to continue and we are going to see a decent amount of shave-off even in the best-run banks at the current juncture.The Great Diwali Discount!
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