In an interview to CNBC-TV18, Arvind Sanger, Managing Partner, Geosphere Capital Management, spoke about his reading of the market and his outlook.
Speaking about sabre-rattling situation in the world, he said that the market will probably remain rangebound but I don’t see a massive sell-off.
Below is the verbatim transcript of the interview.
Anuj: First genuine correction of this bull market and it has come very swift, it has taken 7-10 days for greed to turn into fear? Your sense of what is happening and are we seeking much lower levels?
A: I think we have talked about in the last few weeks that things were about as good as they could be. Volatility index (VIX), which is a measure of risk, directly or indirectly, was at close to historic lows and we always know that some thing or the other when there is that much complacency is going to cause a sharp increase in fear from what seem to be greed at every occasion and we didn’t know where it would come from and now we know where it came from. Korea has been bubbling for a while but things have suddenly reached a new level of name-calling and sabre-rattling.
Latha: Sabre-rattling if it results in nuclear war then this reaction is totally inadequate. So clearly, the markets were probably overbought and were looking for an excuse and this was as good an excuse as any, therefore, how do you gauge this correction? It seems to have come more because liquidity over and fundamentals are bit too much, is the world over and done with, will the correction be for this week or does it always as markets do swing a little more?
A: There is always a little bit of an overreaction in either direction and there was too much complacency and the reality is that the risk of war is of some kind of mistake or some kind of sabre-rattling going too far is a non-zero probability today. So it has gone up from being an absolutely unconcerned issue to being some probability that markets try to adjust you. Where that plays out is hard to see but my sense is that this is the bombastic talk from North Korea that we have seen in the past. It will not follow with any action but over the next couple of weeks maybe the sabre-rattling will continue. So the markets will probably remain rangebound but I don’t see a massive sell-off.
I see more of the kind of profit taking we are seeing now maybe for other couple of days but I don’t see this as a beginning of anything fundamentally changing the market, I just see this as introducing much needed little bit more balance in the market and probably corrections like these are healthy in driving a long-term fundamental growth in the markets around the world.
For full interview, watch accompanying video...
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
