See $ weakening in short term; like banks, hospitality cos:Ambit

From a global perspective, worries over China and the commodity space continue to persist, and the markets are likely to remain volatile till these worries settle, says Andrew Holland of Ambit Investment Advisors. Going ahead, he is optimistic that China will come out with some reforms.

As far as the Indian market is concerned, it is likely to get excited going into the Budget, says Holland. He also expects the dollar to weaken in the short-term, which will in turn be beneficial to emerging markets like India.

He continues to remain bullish on the banking sector and advises investors to look at the hospitality sector. He also says the aviation sector has been a success story; but there is a need to look at valuations.Below is the transcript of Andrew Holland’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Latha: It has been a kind of year which has not given much if you were a Nifty investor, but within the Nifty itself, several stocks have given fairly decent returns. For this month itself, December, what were you long and what were you short on? How has the month turned out?A: Positive for the month. We have kept with our view of the banking sector theme, which has played out well and on the short side, a little less on the short side -- we have been a little more optimistic about the market recovery, so it has been a month of two halves, down in the first part and a recovery in the second and that looks likely to continue now.So, we are keeping our enthusiasm capped a little bit because there is not much happening at the moment and stock movements are kind of, we have seen the roll-over period as well. So, it is always a difficult two days to do anything. So, going into the New Year, we are staying on the long side.Latha: In days of your January and February used to be the rah-rah days. People start buying ahead of the Budget, imagining all kinds of goodies coming there. How would you look at January from here on? How long does it get, 8,100, 8,200?A: There are a couple of things there. I am thinking first of all from a global perspective. I think the worries still remain around China and commodities and then till that stabilises, the volatility is going to remain for markets. But, I am still optimistic that China will come out with some fiscal stimulus and that will calm all of our nerves. Janet Yellen, to my mind has given a nice Put option in terms of interest rates will not go up until the US and the global growth is strong enough to see that happen. So, that is good for emerging markets. And the dollar will weaken in the short-term and that again is good for emerging markets and commodities.So, the backdrop going into what you just asked is reasonably okay at the moment. Obviously, if the Reserve Bank of India (RBI) can reduce interest rates again, which I expect they will, then you can have that nice run ahead of the Budget, but of course, we will have high expectations again of what he can deliver. But last time around, I thought it was a very good and sensible Budget and hopefully it will be the same again.Sonia: One of the themes that Ridham Desai was talking about was the possibility of 2016 being a La Nina year, a year where we get bountiful rainfall. Is that your expectation as well and if yes, how do you play that in terms of sectors and stocks?A: I am not a weather forecaster nor am I going to be in any new life that I might have. So, I cannot put all my bets on that happening. If that happens, that is great and I am sure he has got a great theory around it, but for me, I will boringly stick to our who supplies India theme, which will continue to play out even if rural consumption picks up, they have to buy something and someone needs to supply them with whatever goods and services they want. So, that is the theme that I want to continue to play for the next two to three years.We do feel that this theme is already across a number of sectors, its operational gearing. So, there will be different themes throughout the year, but this is one which will play out over the next two to three years and of course, different sectors at different times will take the lead.Latha: Let us continue our discussion on January itself. What are the themes or stocks you are likely to chase given the backdrop that you just drew up for us -- probable improvement in commodities because of a cheaper dollar and Chinese stimulus and of course, looking up to the Budget?A: The banking sector remains the key theme for us. We think obviously, notwithstanding the fall in interest rates, which will obviously be a beneficiary for them. As the economy picks up, we should start to see loan growth pick up. Hopefully, we are coming towards -- I say hopefully, because public sector undertaking (PSU) banks, I am not so sure I will be so hopeful, but for the private banks coming towards the end of their problems with non-performing loans (NPL). And that will be the sector which will lead the market higher going forward. So, sticking with the private banks for the time being, and if the bankruptcy law also gets through, that is a game changer.I hear lots of negatives around it, but if we just give the banking sector the ability or capability to force companies to think twice before taking loans, I do not think that would be a bad thing for the sector.Latha: There is also that National Investment and Infrastructure Fund (NIIF) that got off the ground so to speak yesterday, still looking for a CEO, so it will be a while perhaps before the money comes in and starts getting invested, but how are you approaching that concept and what stocks might you buy?A: We are looking at where the government is spending money, whether it is transmission and distribution railways, all of these government expenditures. In fact, I am more excited by the railway expenditure, it could add significantly to gross domestic product (GDP). We just need to see more contracts being awarded. But that is going to be one of the catalysts for the economy. So, play around those. Look for companies which supply into those sectors is what we are focusing our efforts in the next or have focused our efforts and we will continue to look at investments.The other interesting one is commodities and whether it is too early or too late to start buying? Is it too early to start at looking at the likes of Tata Steel and the Hindalco. We are getting there, but you need a catalyst for those share prices to move higher and stability is the key there. But the valuations are looking reasonable to start thinking about those sectors again which we have not done for some time and probably against the trend of what we are thinking generally about housing and real estate, maybe that goes through its problems over the next few years, but it does mean that the real estate stocks which are listed could not have a rally. They are all restructuring themselves, getting themselves in better shape. So, it is a sector, which we are starting to look at as well going forward. So, it is a little bit early, but it is what we are looking at.Sonia: I did not expect you to talk about these beaten down sectors so soon. Metals has been a taboo for a very long time, but now, there are people talking about a rebound. What about the other commodities? There has been action in the sugar space that we have seen, we were just discussing how there could be a turnaround in the cycle as well. Would that interest you and there are a couple of other pockets as well, the likes of defence, aviation, these sectors have now come back into the limelight. Anything there?A: Sugar, I know nothing about and I probably will not know anything about. To me it is more of a trading on the ahead of news and sell as soon as it breaks.Aviation I have been asked a few times, and I was trying to think back when Jet Airways was first listed and the euphoria around it and those days of so many people, the telecom sector, how it is going to transform into the aviation sector. I mean, it has been a good success story, but I cannot get too excited at these valuations.Again, playing it slightly different -- if people are travelling more internally as well as foreign travellers coming in whether it is for business or for holidays, the hotel sector is going to be a beneficiary of that and they have operational gearing as occupancy rates rise and obviously, they have pricing power. So, I would like play it a little bit away from the aviation sector into the hospitality area.