Nifty to hit 7k by mid-2014; mkt to be weak in Dec: Elara

The market will probably drift down in the near term from hereon, before the New Year begins, says Harendra Kumar, Head-Institutional Broking and Global Economy, Elara Capital. He expects December to be a soft month for equities.

Also Read: BSE Sensex to touch 24,000 by end-2014: Poll

In the run up to the elections, the market will rise again – with small corrections because fundamentals are not too strong, he says. By mid-2014, he expects Nifty to breach the 7,000 mark. 

He is bullish on power utilities, PSU banks and continues to see significant value in IT companies such as TCS and Infosys.

Below is the verbatim transcript of Harendra Kumar's interview on CNBC-TV18

Q: What is the sense you are getting after those macro numbers and this slight increase in taper fears, have we seen the high for the year in Indian markets?

A: Looks like December is going to be a soft month and more so like sell on news. So post the elections clearly now the investors are taking a step back and probably evaluating what to do for the next two-three months. The volumes have thinned up so we are not expecting much of action especially in this month. So the market looks like it will drift down at least in the interim from here on before the New Year begins.

Q: Although it is tough to put levels on the index right now when you say drift down what is the quantum that you are looking at, do you think 6000 could be a floor for this market or that doesn’t look like a possibility now?

A: If you look at the Gross domestic product (GDP) number and the election results I think the big cracks you can rule out in the market. What you will see is small corrections. The trend at least in the run-up to the Lok Sabha elections should be on the upward direction but yes you will have these small directions in between because the fundamentals are not very strong. So the trend remains strong up to the run-up to the elections but interim I think over the next two months it is kind of softer overall for the market.

Q: What is your outlook for 2014 because in 2013 the returns in equity has been only 6 percent from the start of the year to now, for 2014 do you expect the returns to be as modest?

A: I think the returns will be higher but it will be volatile so you have to brace for some volatility. I think market will breach 7000 definitively at least in the mid of 2014 but whether it will end up there is circumspect. So it will be a largely trading market.