'We may see market correcting deeper upto 7,600-7,500 in coming calendar year,' GEPL Capital research team said in an interview with myiris.com.
Excerpt from interview Myiris had with the broking firm:
1. How do you see market post budget? Where do you see sensex and Nifty levels by end of 2015?
The market seems to be consolidating after the strong run-up we have had between Jan 2015 to early Mar 2015. The crucial level to watch for is 8,050 on NIFTY. This level could be the deciding factor on future movement of the market. If it holds, then, we may see market retesting the recent highs around 9,100 and may even see an overshoot to 9,300. On the other hand if 8,050 is breached, we may see market correcting deeper upto 7,600-7,500 in coming calendar year.
2. Recently RBI has reduced interest rate by 25 bps. There is expectation of further rate reduction in reminder of 2015. Considering this, do you think there is an opportunity to buy stocks from rate sensitive sectors?
RBI has cut the interest rates by 25basis point. Which help to reduce fiancé cost. This will help to provide high leverage to business and liquidity will start floating into the markets. One can expect 50 basis points rate cuts in a financial year. Excess liquidity will also increase the inflation which is again a major cause of worry. We believe that it’s a great opportunity to buy a interest sensitive business like Banking, Auto, infrastructure, capital goods etc, one should also look into the robustness of the business structure and healthy balance sheet.
3. Fourth quarter earnings will be announced next month. How do you see corporate earnings performance for March quarter?
We can expect strong performance from the export oriented business like IT, Pharma and Service sector. Strong spending from the global economies will help these business to report robust numbers. We believe that Banking (majorly private banking and finance)also one of the performing sector. We believe that assets quality of banks & NBFC's will improve followed by the rate cuts decision from RBI.
4. Rupee weakened further and trading at a fresh two-month low of Rs 62.80 against the dollar. How do you see movement of rupee in near-term? How a rising dollar will impact markets?
It needs to be looked at with the US Dollar Index perspective. It constitutes of 57% weight from the EURO, that has seen a multi year low. The USD Dollar index has seen a major move past the 100 mark recently. On the contrary the INR is still off it's low of 64 created in Dec 2014. That gives an intrinsic strength to the INR. We don't see the INR breaching below the 64 mark in immediate term. Also 60.5-61 will be a good support for the USD. We mark it mostly sideways in band 60.5-64.5.
5. What is your advice for retail investors in current market scenario?
Be cautiously Bullish. Stock specific movements are to be watched out for. we advise retail clients to invest in those companies which have strong fundamentals and also better growing prospects. Sectors like IT, Pharma, Banking, FMCG will outperform the broader market indices.
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