Fed taper impact to be short-lived for mkt: Taher Badshah

Below is the verbatim transcript of his interview on CNBC-TV18

Q: Do you think the Reserve Bank of India (RBI) did the right thing? There are many brokerage reports out which say the RBI has just ended up postponing the inevitable. Therefore do you think the market rally is likely to fizzle out once the market catches up with that view as well?

A: It is a good decision, basically from the point of view that it is being realistic in terms of the data points which are coming in. It probably also gives a chance to growth if at all it is likely to come up in the system.

It also guided pretty well in terms of the future outlook that if there was a comeback of inflation then probably they are ready to act.

I think the key takeaway from today’s RBI policy is that if inflation were to trend down then clearly if they did not cut rates they would at least keep rates as it is and that is quite a non-consensus thing because most of the economists on the street till today have penciled-in about a 50 bps hike in interest rates in the course of the next 6-12 months time.

Q: What does that mean for markets?

A: We have crossed one hurdle out of the two important events which were lined up; the first one has turned out to be pretty good for us. We will have to wait for the next couple of days to see what happens to quantitative easing from Fed. But even there I do not really think we will probably see a great impact, the short-lived impact if at all if QE tapering were to begin.

However, the market would be well served if they focus on the aftereffects of the QE. If at all tapering were to begin then what is in it for India - both in terms of global growth opportunity which might come back, and also the fact that you might probably see a correction in some of the commodity prices. So that is something which in the more medium-term should turn out to be good for the country. So I guess both these points seem to indicate that we should see further action in the markets.

Q: How would you look at MCX? Do you think it is now going to be back to business for a company that inherently perhaps has a good model?

A: I think it is a good business to begin with. Given its kind of positioning it is almost a monopoly in what it does and typically exchanges across the world - we don’t really have too many exchanges operating in any particular market. So, it generally tends to be a very consolidated industry.

It is a good business if it can get some of its internals sorted out. It is already being punished quite a lot for some of the apparent corporate governance related events. Also, the fact that the impact of the securities transaction tax (STT) which is probably going to impact earnings that is probably there in the price. It is a good long-term opportunity I would think.