Benchmark indices (Sensex and Nifty) are near its all time high of 2008. What factors do you think contributed to the rise of market? Specially when in July – Aug the country was talking about policy paralysis, slowing economy, fiscal deficits and poor monsoon?
The last time one saw the indices close to current levels was only a couple of years back. The Indian Investor in Capital Markets has had to exhibit great patience. The gloomy scenario that existed in the country looks to be changing, with the government exhibiting some urgency in addressing certain reforms like FDI in retail and increase in price of Petroleum products, to reduce burden of subsidy, Increase in Railway Fares etc. While it can be argued that these measure could give rise to further inflation, no one can dispute that it will they will go some way in addressing the Fiscal deficit situation in the country.Internationally, too, the fiscal cliff was averted. The markets are now looking forward to some stimulus by way of the RBI reducing Interest rates
What the sectors and companies which has contributed to current rally?
In the current rally the FMCG and Banking stocks have been the favourite of the markets
What do you think liquidity or fundamentals as the key driver for the current rally?
While the fundamentals of any stock have to also bear out and support, the main driver of this rally has been liquidity. The unabated flows that we have seen through out the last year has contributed to the rally.
Do you think this is the right to time enter the market? Or one should stay invested in the market? Or get out of the market with profit booking seat on sidelines and wait for fall to re enter?
For Investors who have not invetsed in the markets ever, this is a time to enter the markets by making use of the Rajiv Gandhi Equity Savings Scheme. This will give the first time investor a tax saving on Investments upto Rs50,000/-. For investors who are already invested, they could wait before booking profits,as the outlook for the current year looks promising
Which are stocks/ sectors you would recommend someone to invest in the market? – The shocks which can derail the rally and stimulus that can sustain it.
As our company policy prohibits I don't recommend specific individual stocks through the media. But the sectors that the investors should be looking at, currently, are those sectors that have not participated in the rally viz the telecom sector, real estate or mining sector. The union budget is round the corner and the market has pinned its hopes that policy inaction which is preventing these sectors from performing, will be addressed shortly.If such policy action is missed out in the Budget and the budget turns to be just populist exercise (bearing the elections, next year, in mind) the markets can, once again. begin to stagnate.
What is your expectation of the market by the end 2013?
Its always unwise to try to predict the markets but I think that the Sensex should be around 21500 by Dec 2013
Retail participation in the current rally specially after 2011 is coming down. Do you think only big boys are getting the benefit of the market?
There are several factors that have contributed to the retail investor shying away from the equity markets. The emphasis, in recent times, has been on real assets like real estate and gold.Because of Securities Transaction Tax we have seen a flight to speculative and intraday traders to other markets where such a tax is absent. We certainly hope that this anomaly of a tax arbitrage is addressed in the Budget. I disagree that its only the big boys who are getting the benefit, the fact of the matter is that markets do not discriminate and a s an old Dalal Street saying goes " the tea becomes only as sweet as the sugar you put in it".