shares his views on budget expectations, market outlook and discusses his favorite stocks . Edited excerpts:
Indian markets have recovered about 6% from the recent low, what is your sense, is the worst of the fall now behind us?
It is difficult to say that. There are a lot of risks around obviously, still news flow coming up from 2G scam. Of course there is a big event, the budget which everybody is closely watching. Earnings numbers may come down a little bit more if you look at the street, it is still around 20% growth, maybe mid to high teens is a more healthier number given the economy clearly may slow down, just a little bit, not a low, the growth may slow down a little bit. So yes, can the markets go lower in the short term, yes, they can and if they go lower, that will be an even better buying opportunity. Selectively, it is time to buy stocks now and can you rule out any further weakness unlikely and if you think about the flows that have come in last year, India has been a reasonably crowded trade and some of the nervous investors may sell into any news flow which is negative etc. So you cannot rule out any downside in the short term.
So how would you describe this pickup that we have seen, is it just a technical pullback because fundamentally on ground, nothing has changed?
Technically certainly, markets do not go up to that extent, it is a good bounce but also other thing is some of the issues may get clearer, the government now agreeing for a JPC. That clears a lot of the air perhaps. So at the margin it may be small news like this which could tip things but clearly the thing I am worried about is oil prices, No. 1, budget how good it is etc. I know the expectations are pretty low. So may not be such a big event but it is still something worth watching and of course thirdly, the earnings momentum, we might lose a little bit of earnings momentum for FY12 earnings. So those are the three things are some of the downside risks to the market.
Last year Indian markets got re-rated post budget because the fiscal deficit was looking decent, the Finance Minister had 2 words, disinvestment and then 3G. For the coming year, what to your mind could be the joker in the pack?
The foreign investor wish list is pretty clear and obviously. To start with, they are looking at fiscal discipline and even on paper whatever fiscal discipline the Finance Minister shows is pretty important. So that is No. 1 and you are absolutely right. With the 3G and wireless broadband revenues not there, how is the budget going to look. So it will require a lot of prudence on the non-planned expenditure. So that is No. 1. Second thing foreign investors really want is, there is a feeling that the reforms have slowed down significantly in the last 12 months, particularly things like infrastructure where a lot was promised, very little was delivered and also lot of these things, we keep talking about GST, we keep talking about Direct Tax Code, we keep talking about easing the FDI procedures but very little has been done. Maybe a clearer roadmap will help in the budget and thirdly, in the budget what people are looking at is, everyone knows that with the state elections, there has to be doses of populism whether it takes the form of NREGA allocations or subsidies or otherwise but at the same time, what progress on certain other reforms we are making whether it is the FDI on retail, FDI on insurance etc. So those are the things the foreign investors are looking at and I am sure the government is smart enough to tick some of the boxes. The budget in the end will be mixed and it will have something for everybody. So that is my sense, sitting in late February and trying to figure out what the budget is going to depict. So that is my sense.
Source : ET