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Last Updated : Feb 10, 2014 04:06 PM IST | Source: CNBC-TV18

Nifty likely to settle between 5900-6200: Dalton Cap

According to UR Bhat, MD, Dalton Capital Advisors the Fed taper too is likely to continue, so the only news that could turn the sentiment for India would be some positive newsflow on political front.


It does not look like there are great times ahead for Indian equity market and Nifty could likely settle between 5900-6200 range for the near-term said UR Bhat, MD, Dalton Capital Advisors. Mainly, because not only have the foreign institutional investor (FII) flows been weak in February but even the December quarter results have not been impressive. Results from public sector banks have been really disappointing, he said in an interview to CNBC-TV18’s Sonia Shenoy and Latha Venkatesh

According to him the Fed taper too is likely to continue, so the only news that could turn the sentiment for India would be some positive newsflow on political front.

Sector specific, he said the pharma sector earnings  have surprises positively in Q3, but do not see any green shoots in the cyclical space and would take a call on telecom stocks only post the auctions.

Below is the interview of UR Bhat, MD of Dalton Capital Advisors with Sonia Shenoy and Latha Venkatesh on CNBC-TV18.

Latha: Do you think that the fundamentals of this market have gotten weaker in the past two-three weeks, not the least because the FII money is consistently a sell albeit small amounts?

A: That is the biggest factor that influences the markets FII flows and that has been negative at least in February till now. Plus the December quarter results also there is nothing much to write about especially the public sector banks have been a great disappointment. And the taper continues, there is really no talk of any change in outlook as far as the taper is concerned. If anything there is also a talk about more aggressive taper sometime in the future provided US economic data supported. So on the whole doesn’t look like as if there is a great time ahead for the Indian equity market except if there is some new flow on the political front which makes sentiment much better.

Sonia: The telecom stocks are all lower, Bharti Airtel, Idea Cellular etc and the increased pricing for the 900 megahertz band spectrum has increased the renewal liability for many of these companies. How do you approach the telecom space, would you use this dip to buy or would you stay away?

A: There is still not enough clarity on that because the auction is not over. Right now the auction has reached a level where it will have a reasonable impact on earnings unless they are able to pass it on in a big way to consumers. Sonia: The telecom stocks are all lower, Bharti Airtel, Idea Cellular etc and the increased pricing for the 900 megahertz band spectrum has increased the renewal liability for many of these companies. How do you approach the telecom space, would you use this dip to buy or would you stay away?

A: There is still not enough clarity on that because the auction is not over. Right now the auction has reached a level where it will have a reasonable impact on earnings unless they are able to pass it on in a big way to consumers. There is increasing resistance to that.

So, right now unless the final figures of the auction are known, I think it is better to just keep a watch on this and keep away from this.

Latha: Would you dip into any cyclical at all or do you think there will be time for it?

A: There is certainly time for that but we don't know when the turn would happen. If manufacturing contracts, then what are we talking about? It is like 1991-92 and if you see the state of the public sector banking system I think it is reminiscent of 1991-92. Something dramatic needs to be done.

The bigger guys are below 5 percent but generally if you see the net non-performing asset (NPA) figure is about 3 percent. The RBI also has given them lot of indulgence in terms of restructured assets. So if you compare like-to-like, things are pretty bad.

Cyclicals one needs to nibble again because things can change quite dramatically just with a few policy announcements and with the prospect of a strong government being in place, increasing resistance to that. So right now unless the final figures of the auction are known, I think it is better to just keep a watch on this and keep away from this. 



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First Published on Feb 10, 2014 11:43 am
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