See mkt in narrow band, no major surprise from VoA: Kotak

Below is the interview of Dipen Shah of Kotak Securities with Ekta Batra and Anuj Singhal on CNBC-TV18.

Anuj: Do you think the worst phase for the market is out, we had a bit of a correction, do you think that is coming to an end?

A: As far as the market is concerned we have seen an upside today but we should remember that we have come off about 4-5 percent from the near all time highs which we had witnessed a couple of weeks back. While the reasons for the same are the global factors like the acceleration of the Federal Reserve (Fed) taper program as well as the weakness in some of the emerging market (EM) currencies, we also see that as a correction to the upsides which the markets had taken, despite no change in the fundamentals. By fundamentals I mean that the overall economic growth as well as the interest rate inflation factors which over the past several months have not seen any significant improvement.

So as of now sitting at the valuations at which we are quoting about 14 times, we believe that the markets are currently pricing in all the factors on the positive or on the negative side.

Going ahead the markets should actually take up a trend depending on what news comes in; either it is on the political front where some positive news comes in the next two-three months or if there is some incremental negative news on the global front in terms of further acceleration in the taper program or some other problems in the emerging economies.

So we think as of now the markets should be in a narrow band and should breakout on either side depending on a positive or a negative news globally or internationally.

Ekta: To focus on parliamentary proceedings, we had the rail budget today and then the vote-on-account (VoA) which takes place on Monday, do you have any expectations from the VoA for this time around?

A: The VoA, according to us, is not going to throw any major surprises. Obviously changes on the direct tax are ruled out but we believe that there could be some benefits which could be given to some of the troubled sectors as far as the indirect taxes are concerned.  

So maybe reduction in excise duty or maybe increase in import duty of some of the commodities maybe taken up but beyond that we believe that there will be a broad direction, which will be given by the finance minister about how to take things ahead from here.

There could be some focus on the social initiatives on which the government has been banking on. So beyond that looking specifically at the economy on a broader basis, we don't think there will be any major announcements, save for some of the indirect tax changes, which might come in for some of the troubled sectors.

For the entire interview watch video