Mkt will remain under pressure; avoid oil cos: Anand Tandon

A: Oil companies are always unpredictable because they are completely dependent on the government, so it is extremely difficult to figure out how they will react and especially given the election time that we are in, the moves are likely to be negative for the companies. So, it has always been my position that they are not really soft. They are soft if you are looking at as a reflection of government policy rather than equities and therefore, valuations are irrelevant. Given this current move, it is not particularly positive for these stocks, so the best thing you can do is probably stay away.

Q: Do you think the Nifty is very precariously poised now to even breach 6000 and may react to the amount of populist measures that might come up from the government in the run up to the elections?

A: First of all I would think that the reason for the Nifty to be poised precariously may not only be so called populist measures. There is a move towards increasing the Dearness Allowance (DA) to government employees by 10 percent; that will be a permanent problem in terms of managing the deficit rather than something that will be one-off.

The government deficit per se has been addition and the debate that we see in economic circles is always about how you should raise revenues rather than maybe curb expenditures. Until that changes, it will be a perpetual problem. At the ground level there is very little happening in terms of the economic growth, companies are struggling and I do not see that changing anytime soon. Earnings will not suddenly rise and therefore, market will continue to remain in pressure.