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Last Updated : Jun 09, 2016 12:15 PM IST | Source: CNBC-TV18

Nifty to test 8350 by June end; rural demand key: PhillipCapital

Optimism for the Indian equity markets prevails given Nifty has crossed and sustained 8250 level convincingly over the last few session, says Vineet Bhatnagar, MD, PhillipCapital. 

With the market convincingly crossing 8,250, it is poised to close Nifty June expiry above 8,350 levels, says Vineet Bhatnagar, MD of PhillipCapital.

In an interview with CNBC-TV18, Bhatnagar said that [from a medium term view], the market was now poised at a crucial juncture, at over 18 times FY17 earnings.

Investors should now look to themes that they think could benefit them. Toward this, PhillipCapital is holding a two-day conference where discussions will be take place on two key themes: rural economy and the impact of digitalization on the banking, financial services and insurance (BFSI) sector.

Below is the verbatim transcript of Vineet Bhatnagar’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Latha: The Nifty is kind of surprised with this speed with which it got to very closed to the 8,300 level but it has been sulking at that level for some time now. What are the future and options (F&O) cues that you are picking up? Do you think in this contract we will tied over 8,300? What kind of highs, what kind of close for this contract?

A: Having crossed 8,250 very convincingly and having stayed above 8,250 for a few trading sessions there after there is a tremendous amount of optimism as far as way the closing for the June expiry could come about. Our own expectation is that this expiry we should seek Nifty closing around 8,350 and upwards for the June contract.

Sonia: I was more interested in your Ground View Conference where I understand that you have over 115 participants coming in, the conference that begins today. Tell us a little bit about the feedback that you have got so far if at all and what does the conference entail in terms of the kind of views that you expect, the kind of corporate that are joining in?

A: It is a two day conference; it is the third edition of our Annual Ground View Conference. We have had a tremendous amount of turn out in terms of the participants. About more than 48 midcap and largecap corporate are participating. However, one of the themes that we have pursued for the last two years for which we have received some tremendous feedback from our institutional clients is the fact that the entire format of this conference is about checking the ground realities and therefore the Ground View.

It is very important from our perspective to not only bring together a mix of largecap and midcap companies but also leading industry consultants, FMCG distributors, channel partners and the likes so that whatever are the emerging trends at the ground level are picked up and there is a validation to weigh the market is heading and how the corporate earnings over the next few quarters would come about. In fact it is also very timely because if you look at what Latha was mentioning in terms of the speed with which the market has moved up it is now trading at around 18 times FY17.

It is important for everybody participating in the market now to take a view whether this is really sustainable and if it is then what are those larger themes that we would like to play out. We are concentrating on two, over the two day period one is the rural economy and the rural demand which begins through our kick off of a panel discussion this morning and tomorrow there is a panel discussion on digital disruption in the BFSI space.

So, there will be a discussion through eminent participants of the panel about how the banking and the financial services industry is changing or would change considerably through the digitalisation process and the methods.

Latha: In this case the Reserve Bank of India (RBI) itself has checkmated the digitisation by its Unified Payment Interface (UPI) otherwise the payment banks would have been a major disruptor. However, with this UPI coming and the initiative is gone to the regulator checkmate there.

A: In fact National Payments Corporation of India (NPCI) is actually participating tomorrow as one of the panel discussion participants. We do want to bring about precisely what you are saying. We are bringing the payment gateways, we are bringing the regulator, the UPI related discussion and the banks. So, that there is a way in which our institutional clients are able to takeaway as to how much of disruption would really come about.

Sonia: I wanted to talk a little more about the first panel discussion which was the rural demand. I noticed in your midcap favourites you have a lot of cement companies, a lot of the consumption oriented plays the likes of Heidelberg India, JK Cement etc. What is the sense you are getting about a pick up in the rural India? We are getting a mixed feeling from a lot of companies that we speak to?

A: If you look at the way the market has started taking back on names like Dabur, Mahindra & Mahindra and Escorts clearly the market is placing a great amount of optimism in rural demand and perhaps above normal monsoon that has been estimated and forecast for this particular year. What our attempt is through this particular conference is to bring a mix of not only the listed stocks or the listed companies in the consumer industry but also leading consultants and their channel partners and distributors, as I was saying earlier to validate whether the emerging trends are really there for the rural demand to play out the way the market is expecting it to play out.

So, at the end of the conference today and tomorrow there will be a greater sense of how much of what we are all expecting will translate in terms of earnings in next two or three quarters.

Latha: What have you made of the foreign institutional investors (FIIs) participation? Any specific stocks that you see them betting on, betting against in this contract? It is a tough contract because Brexit happens, FOMC meeting happens, so which are the stocks that you want investors to keep an eye on?

A: There is an overall optimism that we have seen in terms of the trading volumes and the amount of new positions that have been taken between May and June contracts. Clearly, it is visible even at the market level in terms of the way the build up and the volumes have quickly come into the market in the last 30-40 trading sessions. However, there is an overall broad based approach that I am witnessing right now.

Obviously, in the underlying cash market the midcaps have again started flying rapidly and perhaps in a very surprising way the focus in terms of the sector that is there clearly comes from consumer industry. There is some interest in largecap cement names there is also interest in the auto names. So, there is a variety of sectors which are finding trading interest as per as FIIs and professional traders are concerned.

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First Published on Jun 9, 2016 10:29 am
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