Alex K Mathews, Head - Technical & Derivatives Research, Geojit BNP Paribas Financial Services has vast experience in technical & derivatives research. He holds an MBA degree and has several years experience in the investment business, primarily on the research side.
In an exclusive interview with Ashwini Kunder of Myiris.com, he provided insights on the current market scenario and market outlook.
> Sensex is at around 17,000 levels, how far the index will go by March 2010? What is to be done if there is correction now?
Sensex is currently at 17,000 is likely to have minor correction. As of now, we are not foreseeing any major downtrend. On the otherhand, we expect Sensex moving from 18,000 to 19,500 in coming future. Uptrend is supported by high liquidity, inflow of foreign money and strong growth which we achieved in last quarter. Mining is the major sector that saw immense growth. Indian Mutual Funds are sitting with Rs 130 billion and a lot of foreign financial institutions are waiting in sidelines for correction so if there is any correction then it can be utilized by buying at dips.
> How are auto and realty sectors likely to perform ahead?
Loan growth is not so encouraging but still it is above average. Latest data show that banks have deposit rate of 20% and lending rate only at 13%. Even though lending percentage is slightly lower, we think that auto and realty sector will outperform in coming quarter because lot of retail investors are investing in housing sector. Demand growth can be moderately positive in coming quarters.
> What is your expectation on inflation and its impact on the markets in near term?
Inflation led by high essential commodity prices will have negative impact on market sentiment. Even we can expect higher interest rate regime in coming quarters.
> According to you which sectors are attractive at current levels and will likely to emerge stronger over medium term?
We are positive on auto, banking and metal.
> How do you see India Inc earnings performance for FY10 and FY11?
We are expecting stronger growth for Indian corporates due to better than expected performance of our economy and companies. Expectation of high GDP growth, government`s proposed disinvestment programs, government's thirst for higher infrastructural spending; government's economic reforms can boost the corporate earnings.
> What is your expectation from forthcoming RBI monetary policy?
We are not expecting interest rate hike in the short term but for medium term, we expect higher interest rate due to rise in inflation.
> Many small traders have been priced out of the futures and options (F&O) market, following the dramatic surge in stocks and a jump in the minimum cash requirement for trading in equity derivatives. Any comment.
Majority of contracts are above 5 lakhs due to surge in stock prices. Also F&O segment is highly risky. My strong opinion is that for retailers' delivery based stock trading is advisable.