Arindam Ghosh, MD & CEO, Blackridge Capital Advisors believes market should correct another 5-10 percent in the near-term to become more attractive and the valuations a lot more supportive. According to him, if the market consolidates around 8-10 percent, it is a good entry point.
In an interview to CNBC-TV18, Ghosh says there is lot of excitement and buzz in the Indian market currently due to support from global markets, improved macros and an outstanding Budget, will give the necessary push for infrastructure and manufacturing,
"Monsoon was a big threat and the fears have, to a certain extent, started to receipt with a pickup in monsoon, but we will have to wait and see how it actually plays out over the course of the next two months," he adds.
On specific sectors, Ghosh recommends waiting for a better entry point for telecom stocks. However, gas pricing announcement will determine the move in oil and gas space, he adds.
Below is verbatim transcript of the interview:
Q: Do you think the post Budget correction or the mini correction is over and is the market ready for the next upmove? What would be the key triggers going forward?
A: It is always very difficult to predict short-term trends in the market. Budget was probably the biggest event with the new government in place and the general expectation was that once the event was out of the way market would get into some kind of a prolonged and protracted consolidation phase which has not been really the case.
We have had a shallow consolidation, I wouldn't call it a correction. So the going has been good and one should just sit back and relax and enjoy the ride. But having said that, I think from a market point of view it is important that we have a 5-10 percent correction which would make the market a lot more attractive and the valuations a lot more supportive.
Q: What could be the trigger for that correction because we have been looking both inwards and outwards? Crude moved up to USD 115/barrel but immediately corrected back and domestically also whatever disappointment you had on Budget, that also the market has taken in its stride. So, what do you think would be a catalyst for any kind of correction?
A: It is really difficult to say because the global environment today is a lot more supportive than what it was in the past. We have the occasional geopolitical fear which then leads to some kind of correction in the emerging markets. But these are largely restricted to very specific regions and therefore, not really something which can really trigger significant risk-off kind of an environment.
So the global environment along with the fact that we had a fair amount of global liquidity slouching around, I don't see any kind of negative news flow or figure which can pull the markets down. Domestically, the fact that India looks lot better in terms of its macros, the fact that we have an outstanding Budget which is really pro-growth with a lot of things to give the necessary push for infrastructure and manufacturing, I think there is lot of excitement and buzz around India at the current moment. That would keep continuing.
Monsoon was a big threat and the fears have to a certain extent started to receipt with a pickup in monsoon, but we will have to wait and see how it actually plays out over the course of the next two months.
From an earnings point of view, I don't see either on the upside or on the downside any major shocks or surprises. We would get into some kind of sideward drift and the market can stay ranged.
You will have some days of very listless day on day market movements and then as and when some major policy announcements happen, you can see the market again reacting very positively to that. But the negatives are really limited at this point in time. So from that point of time we really don't see significant downside from current levels but if there is anything that can really pull the market down by about 8-10 percent, that would be a good entry point for a whole lot of investors because it is not necessary that all great companies are great stocks.
Once we understand that basic investment philosophy, we would really wait to see if there is some kind of price correction happening in some of the stocks which are really good quality high beta stocks but which have actually run-up quite a bit.
Q: Considering that we have this bullish sentiment in our market, would you then take an opportunity to possibly accumulate on telecom stocks? The telecom stocks have marginally performed on year-to-date basis.
A: It is actually early days. We will have to see how this entire payment platform actually plays out, how incrementally it adds to the revenues of these companies. The sector per se on their own has its own inherent issues, competition around pricing etc. Today, you have a much wider choice and you keep sliding up and down the capitalisation curve whenever in the large cap or midcap. There are enough opportunities beyond certain sectors where you can still keep a wait and watch neutral stance and see how it evolves over the next couple of quarters.
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