Raj Bhatt, Vice-chairman and CEO, Elara Capital Plc, tells Rahul Oberoi what investors can expect post the Union Budget and which sectors are looking good.
How do you see the Indian capital market panning out after the Union Budget?
The Budget has resulted in some positive sentiments. However, India is not an investment theme right now, as it was some time ago. The instability in the developed markets, such as the US, prompted investors to look for other investment destinations and India was one of them. But now, with the recovery witnessed in developed markets, investors are moving back. Also, domestic earnings figures did not surprise investors. Hence, investors are taking a break. We are likely to see lacklustre trading sessions for a couple of quarters.
Which sectors are likely to be favourable for investors?
Infrastructure, FMCG, hotel and power equipment sectors are looking good from here on. However, due to the liquidity crunch, investors may not be comfortable with real estate. Also, the power generation sector is looking weak as there is an expectation that lower tariffs can affect their earnings.
The finance minister has said that foreign individuals would get a chance to invest in Indian mutual funds. What would be the impact of this move on the mutual fund sector and the markets in general?
The move is definitely a good one and we will surely see a rise in foreign inflows into the domestic market. But, the process, in all probability, will take some time to materialise. Hence, it will not impact the markets immediately.
With inflation still a concern, what is your view on ratesensitive stocks, such as the banking and auto sectors?
If I was an investor, I would not stay away from ratesensitive stocks because they have corrected quite a lot. Any positive news related to these sectors can push up stock prices from the present level.
Political tension in Libya has resulted in rise in crude prices. What could be the long-term impact of the crisis?
Libya produces about 1.7 million barrels of oil per day-almost 2% of the world's daily output. If the crisis continues or escalates in other arab countries, the prices of crude oil could go up further and we could witness a further rise in trade deficit and inflation figures.
Where do you see the Indian capital market by the end of this year?
The market is likely to remain range-bound this year. Depending on the macro-economic policies, we can see the BSE Sensex trade in the range of 18,000 and 22,000 levels during the year.
Being a global player, how do you feel foreign fund managers are currently viewing India?
In the long term, India is still attractive. However, for short term, they have taken their eyes off it. They will be apathetic about the Indian market for a few quarters now. If there are some positive developments, they will surely come back. Also, as compared to other emerging economies, especially South Korea and Vietnam, Indian markets are still expensive.
|YOUR GUIDE TO UNDERSTANDING MARKETS|
|It's Bull v/s Bear on the stock markets|
|2.||Market volatility tests investor patience|
|3.||'Lacklustre trading to continue for some quarters'|
|4.||'Firms with good management deliver well on bourses'|
|5.||Invest in stocks with sound fundamentals|
|6.||Pick the best IPO to invest in|
|7.||Check grades before investing in IPOs|
|8.||'Look beyond grading when investing in firms'|
|9.||8 Deadly Sins of Investing|
|10.||'Widespread investment by people will lift the market'|
|11.||Expected mixed response to MII report: Bimal Jalan|