Gaurang Shah, Asst. Vice President, Geojit BNP Paribas Financial Services spoke to Surabhi Roy on the stock markets and economy.


The markets have been on an uptrend in 2012. Do you expect them to correct anytime soon? What are the key (Nifty) levels one should keep a tab on?

The markets have been driven up on the back of liquidity. The foreign institutional investors (FIIs) have put in around Rs 15,000 crore till date in the Indian markets.

On the domestic side, we have two important events in the near term to keep a tab on – the outcome of state election and the Union Budget. I feel that any investor, big or small, would want to go light into both these events.

On the Sensex and the Nifty, we have recovered 13% to 15% from the December 2011 lows and can expect some consolidation and profit booking in the markets to the tune of 4% to 5%. One should keep a tab on 5,180 and 4,880 levels on the Nifty (spot).

The government has pegged the FY12 economic growth at 6.9%. Do you think that this is achievable or will the growth actually come in lower than this?

The 6.5% figure looks to be more realistic. I don’t think this will be huge negative given that globally we have slowdown and recession.

How do you see the situation panning out in the euro-zone? Have the markets factored in the worst?

Greece will default on its obligation, I think. However, we will have to see if any other country in the euro-zone gets affected by this and to what extent.

Do you expect the Indian markets to attract a significant quantum of FII money this year as compared to the other emerging markets? Why?

At current levels, the markets look a bit overbought. But on correction, one will definitely see FII flows coming in to India and other emerging markets primarily because of domestic consumption and a healthy GDP/IIP growth.

The broader markets have been outperforming the benchmark indices. Do you like any stock in this space from a medium-term perspective?

Some of the stocks have regained 50 – 70%. I don't think this can continue for long. As and when the markets correct, the broader markets will be the first one to fall. However, some of the stocks we like are Cipla, Glenmark, IRB Infra, YES Bank, Idea Cellular, IndusInd Bank, Tata Chemical in this space.

What is your investment strategy at the current levels? What are the key takeaways from the December quarter results of India Inc?

I feel one should take money off the table from a short-to-medium term perspective. One should start redeploying or making fresh investment from sub-5,150 levels on Nifty. Add as and when the markets (Sensex or Nifty) correct 5% to 10%.

On Q3FY12 earnings, we feel that there have been pressure on top-line and bottom-line across the sectors. Some companies in the real estate, power and some of the PSU banks have reported dismal numbers. This may slip over in the Q4 too, though post that we may see recovery. However, a lot will depend on how the Rs /$ equation pans out.