Year 2014 has not started well for emerging markets resulting in lower inflows. Yesterday, Sensex fell 255 points, while the Nifty tanked 89 points. But Hiren Ved, Director & CIO, Alchemy Capital Management believes it is not because of FII selling as much as lack of buyers that led to the weakness in the markets.
He expects the interim Budget on Monday to be a non-event for the market. He says finance minister P Chidambaram might choose to cut plan/ non-plan expenditure to curb fiscal deficit. He believes the market already discounted Vote on Account.
Below is the verbatim transcript of Hiren Ved's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Sonia: It has been a tricky market for us, one step forward and two steps back in the last many days. How are you approaching it? Are you fearful that we could be seeing lower levels because of foreign institutional investors (FIIs) selling?
A: The year has not started well for emerging markets in general. There have been significant redemptions from emerging markets but having said that if you look at year to date performance of India, India has done relatively much better than other emerging markets. So, if you ask me in absolute terms yes, we are down but then the whole world was correcting including emerging markets and we cannot be any different but in relative terms I would say that there is no cause for any despondency because we have done relatively better.
Latha: Any thoughts on what happened yesterday. We were definitely underperformer, we ended up lower and lower, at no point support came and surprisingly 6,000 was hit, the lowest point we ended and even today despite some green on the screen we are again at 6,000. Is there something worrying the market more now?
A: I would say worrying the market but largely people are on hold, people want to wait and see. We have a big event in terms of elections coming in so my sense is that people do not want to take a very aggressive stance before that event and as I mentioned that we have seen some pressure on emerging markets so the flows have reduced considerably and you could have a particular day where, for example if LIC doesn’t step in, you could have lack of buyers - I would say it was more lack of buyers rather than any significant selling, why the market have probably been on the weakish side over the last couple of days.
Latha: You do not think the market is lightning ahead of the Vote on Account. How would you prepare for today and for Monday and do you think it could leave the market unruffled?
A: My sense is that it is going to be a non event. People will try and look for some finer details. There are not going to be any policy level decisions being taken, so people will focus on few things like the fiscal deficit. How much of the subsidy flows over to the next year and also next year’s figure in terms of what is it that he is planning. I think while what happens in the next year will clearly be the preserve the next government but some direction would be known because unlike last year where revenue projections were very aggressive, you cannot have now revenue projections very aggressive going into next year because the economy whole it will bounce back but it is not going to be a v-shaped recovery that you will see revenues coming up pretty strongly. So, given that context you probably won’t see any significant - it will be tinkering here and there.
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