"We are seeing this very powerful risk-on in global markets. As long as that continues, equities should be okay," he added. Meanwhile, he sees the Nifty hitting new highs of 6,150-6200 going ahead.
Below is the verbatim transcript of Udayan Mukherjee's view on CNBC-TV18
FIIs on India
Over the last few days one can sense that expectations of global growth have started picking up. Earlier, there was a lot of apprehension but the cloud seems to have lifted a little bit.
He further says, the American investment houses have actually been deploying capital because from where they come, there has been much more confidence. The US and Japanese investors probably have been more exposed to equities over the last few months but European investors have been very cagey and cautious.
Since in the last few days, European markets have done quite well and given the US data, there is a little more confidence in the air. So, one is seeing a bit of risk-on that is throwing more money to work even in emerging markets (EMs) and that is the genesis of what is going on right now.
Even last month, the fear was that some of the data points that were coming from the US led people to believe that growth is falling off. However, in the last 10 days expectations of growth have been rekindled. Therefore we are seeing this very powerful risk-on in global markets. So, as long as that continues, equities should be okay.
A lot of people may have been left out from this rally in a sense and they have been disbelievers but some money incrementally on the margins is beginning to get to work in markets.
Indian Market
On India specifically, the kind of refrain that I keep hearing from most of these people is that a little bit of what has happened in the last few days in terms of the new money that we are getting is performance chasing.
According to a fund manager at 5,500 things were not looking great for India and it was leading to a vicious kind of mood spiral of its own. However, now with the markets having bounced back 10 percent over the last 15 odd days, more people are looking at India closely because the pullback has been as sharp as the fall had been.
People are a little baffled at these very sharp swings or mood swings in the market. Suddenly the market will go down 10 percent and then before you know it, in a fortnight the market is back where it fell from. This volatility in the Indian market seems to be baffling people a little bit. However, the recent performance has got India right back on the radar of most investors although some people are entering the party a bit late.
If you look at the performance of the last few days, some of the global plays have started doing well; IT has come back. Over the last many weeks, IT had been a bit of a dog post the results coming in. But stocks like Tata Consultancy Services (TCS), HCL Technologies had come down to very attractive levels.
Maybe the fall was because of these global concerns that we have been talking about. People did not want to be in some of these global exposures. There were also some immigration issues, which were not helping the IT story.
However, as soon as valuations became attractive for some of these high quality stocks with whom the global investors have been with for sometime, a lot of these people have topped up on IT over the last 10 days, using these corrections.
He feels, as long as the global mood remains in place, we will see some of the slack in the Bank Nifty being picked up by global IT plays. Also some of these commodity plays like Reliance Industries Ltd (RIL) coming back to Rs 825-830 and few of these other largecap names also tie-in with this global theme that has been invoked for the last few days.
It is no surprise that some of the export oriented plays have started doing quite well over these last few sessions.
Also read: FIIs may be buying; but it is not a bull market yet: Citi
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