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Last Updated : Aug 27, 2019 08:16 PM IST | Source: CNBC-TV18

Nifty may bottom out at 7200; outlook +ve: Birla Sun Life Ins

Despite the ongoing market sell-off, domestic institutional investors are not seeing redemption pressures even as inflows have slowed down, says Sashi Krishnan, CIO of Birla Sun Life Insurance.


Despite the ongoing market sell-off, domestic institutional investors are not seeing redemption pressures even as inflows have slowed down, says Sashi Krishnan, CIO of Birla Sun Life Insurance.


In an interview with CNBC-TV18, he said that markets have bottomed out and Birla Sun Life is bullish on the market.


The Union Budget will be the next big trigger as increased government expenditure will be taken positively by the market, he said.

Below is the transcript of Sashi Krishnan’s interview with Anuj Singhal and Ekta Batra on CNBC-TV18.

Anuj: Any signs of redemption pressure that the domestic fraternity is seeing?

A: We have not seen redemption pressures yet, but the inflows that we have been seeing into both the mutual funds and the insurance has slowed down a bit, because with this kind of a meltdown in markets, people do get a little worried and people do get concerned about volatility. And you realise that the Sensex has lost something like 9 percent from January 1, maybe more today. And assets like gold have actually gained 12 percent. So, you do have a lot of retail investors who say that is this the time for us to wait and watch and look at how markets will react as we go ahead.

Ekta: How are you rejigging your portfolio?

A: We are not rejigging our portfolio in a big way, but we are buying very selectively, because we would rather now wait for a lot of the bad news to get reflected. We have reached a situation where at one point of time, good news was good news and bad news was also good news, because people would reflect the economy if there was bad news. Today, what happens is bad news is bad news and good news is also bad news. And we are at that kind of a situation and therefore, we would like to wait a little bit. But we are not rejigging our portfolio. We still are playing the early cyclicals, we have got exposure to cement, we have got exposure to refining and oil and gas, we have got exposure to some of the cyclicals and we continue to remain over there.

Anuj: a lot of people want to know what is the floor for this market, because it just kept getting lower. Earlier, the talk was 8,000 will not be breached, then 7,800, 7,500, now 7,200. What according to you would be a good floor for this market?

A: That is a good question, because the last time when we spoke, I had told you that I will not be surprised if it is 7,200. Now, we are already there at 7,200. So, whether I would like to revise that number or not, I do not think I am going to call or float the market, the markets seem to have bottomed out, is what we do believe. And, at these levels, if you look at the short-term price to earnings as compared to the long-term price to earnings, it is at a significant discount and therefore, you can see markets bottoming at this level. And therefore, at 7,200 levels, we would think that we would be buyers whenever we see inflows into our insurance funds.

Ekta: What is your sense in terms of maybe the next couple of triggers which could result in a possible floor for the market? I am not saying to give a number to it, but no incremental fall or maybe a range bound consolidatory trade that we could expect?

A: The first big trigger is going to be the Budget. All of us are watching that very carefully, because there are three or four things that people would look for very carefully. If this government can control the fiscal deficit at anywhere between 3.5-3.9 percent, that will be taken as a very positive sign by the markets. If the planned capital expenditure number is actually higher by about Rs 1,00,000 crore or so, that will be taken extremely positively by the markets. Thirdly, the markets see that the strategy that the government has towards bank recapitalisation and they do believe that this will result in at least the banks being able to sort out a lot of the immediate problems, that would be taken very positively by the market.

And fourthly, the market will also be seen as to what are the kind of allocations that the government makes or the Budget makes towards the rural spending and the rural sector, because if at all anything has held up this gross domestic product (GDP) number that we saw, that 7.3 percent of GDP, it was primarily private expenditure and private consumption expenditure. And if the government does something on that front, a lot of confidence will return, so that would be one big trigger and we will be looking at these four things possibly to take a view on whether markets have bottomed out or not.

(Copy edited by Sidhartha Shukla, interview transcribed by Stanford Masters)

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First Published on Jan 1, 2016 12:00 am
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