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The year 2011 is coming to an end. However, the problems that the markets faced in this tough year are nowhere to their end. Dilip Bhat, joint managing director of Prabhudas Lilladher says, the markets will continue to be haunted by the slowdown. “In the next six-nine months, we could see the Nifty gradually drifting downwards. We could see a level of around 4,000,” he adds.
Investors lost around Rs 20 lakh crore of their wealth in Indian equities in 2011. In an interview to CNBC-TV18, Bhat says, 2012 will virtually be a wash out year for any investor looking to make money. “Things are going to be very tough in 2012,” he adds.
Also read: Breach of 4640 proves negative bias on Nifty, says Sukhani
Below is the edited transcript of his interview with CNBC-TV18's Mitali Mukherjee and Sonia Shenoy. Also watch the accompanying video.
Q: How are you calling 2012, especially the early half any expectation or possibilities of an early rally, given all the events stacked up?
A: In the short run, pre budget, possibly there could be a scope for reasonable rally, maybe 300-400 points from the current levels. But beyond that, I still feel that things are going to be very tough for 2012.
In my opinion, 2012 will virtually be a wash out year for any investor looking to make money. In the next six-nine months, possibly we could see the Nifty gradually drifting downwards. We could see a level of around 4,000 because I think the slowdown, which has just started, will continue to haunt the economy, the investor and the stock market all throughout 2012.
Q: You said a level of 4,000 on the Nifty, would that be a bottom for the market? If you had to give us a year-end target, where do you see the Nifty?
A: I would still think that by the end of 2012, maybe we would be back to 4,500 or so. But my own guess is that this 4,000 may not necessarily be the bottom. We could still see a deeper correction.
Despite the fact the interest rates kept on going up, it did not contain the inflation, but it damaged the economy. The slowdown is unfortunately is happening at a time when there is a global deleveraging. So, I think all these things will weigh very heavily on the economy.
I think the gross domestic product (GDP) growth of around 6-6.5%, which a lot of people have started talking about, would lead to further downgrade in the earnings forecast which currently are at around 13-15%. I think we need to come down to around 10%. That would set a tone for maybe further deeper correction than that is what my fear is.
Q: What should the investor call be at this point? Is it better to deploy funds into other lucrative avenues like fixed income or FDs for the year?
A: My greatest fear is that maybe 2012 will be a washout. That does not rule out that there could be enough bear market rallies in the stock markets. That is a possibility. But, otherwise, somewhere if one is getting reasonably good fixed returns of maybe around 10-11% in the FDs, people for atleast one-two years maybe will have to park their funds there, if there is no compulsion to put the money in the stock markets.
Q: The hardest hit has been the Bank Nifty this year. How will you approach the banks going into next year?
A: I think banks with the weightage of around 25% would be a very active participant. If the market comes down, that sector certainly will be there. I think on the other hand there could be oil and gas sector also which probably would face the brunt. I think the capital goods sector would also continue to reel under this kind of onslaught.
Q: On the earnings parameter, what do you think next year will throw up? How tough or easy do you think the earnings performance from the quarter gone by will be?
A: In this run up to this December quarter, I think the IT sector will possibly stand out. I don’t know how they will play out on the currency, probably we are not very sure. I think that the IT sector should probably do well.
Auto sector should do reasonably okay, especially the select ones like Bajaj Auto , Mahindra and Mahindra . Ofcourse, Maruti is going to be a washout even in this particular quarter.
Apart from that, I don’t any other sector stand out in particular. The banks, which continue to show better net interest margins (NIMs) than what they showed last time, will stand out. But the non-performing assets (NPAs) provisioning will be very closely watched over there.
Otherwise, I think it is going to be extremely mixed bag, extremely muted one as far as this particular quarter goes.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
The year 2011 is coming to an end. However, the problems that the markets faced in this tough year are nowhere to their end. Dilip Bhat, joint managing director of Prabhudas Lilladher says, the markets will continue to be haunted by the slowdown. “In the next six-nine months, we could see the Nifty gradually drifting downwards. We could see a level of around 4,000,” he adds.
Investors lost around Rs 20 lakh crore of their wealth in Indian equities in 2011. In an interview to CNBC-TV18, Bhat says, 2012 will virtually be a wash out year for any investor looking to make money. “Things are going to be very tough in 2012,” he adds.
Also read: Breach of 4640 proves negative bias on Nifty, says Sukhani
Below is the edited transcript of his interview with CNBC-TV18's Mitali Mukherjee and Sonia Shenoy. Also watch the accompanying video.
Q: How are you calling 2012, especially the early half any expectation or possibilities of an early rally, given all the events stacked up?
A: In the short run, pre budget, possibly there could be a scope for reasonable rally, maybe 300-400 points from the current levels. But beyond that, I still feel that things are going to be very tough for 2012.
In my opinion, 2012 will virtually be a wash out year for any investor looking to make money. In the next six-nine months, possibly we could see the Nifty gradually drifting downwards. We could see a level of around 4,000 because I think the slowdown, which has just started, will continue to haunt the economy, the investor and the stock market all throughout 2012.
Q: You said a level of 4,000 on the Nifty, would that be a bottom for the market? If you had to give us a year-end target, where do you see the Nifty?
A: I would still think that by the end of 2012, maybe we would be back to 4,500 or so. But my own guess is that this 4,000 may not necessarily be the bottom. We could still see a deeper correction.
Despite the fact the interest rates kept on going up, it did not contain the inflation, but it damaged the economy. The slowdown is unfortunately is happening at a time when there is a global deleveraging. So, I think all these things will weigh very heavily on the economy.
I think the gross domestic product (GDP) growth of around 6-6.5%, which a lot of people have started talking about, would lead to further downgrade in the earnings forecast which currently are at around 13-15%. I think we need to come down to around 10%. That would set a tone for maybe further deeper correction than that is what my fear is.
Q: What should the investor call be at this point? Is it better to deploy funds into other lucrative avenues like fixed income or FDs for the year?
A: My greatest fear is that maybe 2012 will be a washout. That does not rule out that there could be enough bear market rallies in the stock markets. That is a possibility. But, otherwise, somewhere if one is getting reasonably good fixed returns of maybe around 10-11% in the FDs, people for atleast one-two years maybe will have to park their funds there, if there is no compulsion to put the money in the stock markets.
Q: The hardest hit has been the Bank Nifty this year. How will you approach the banks going into next year?
A: I think banks with the weightage of around 25% would be a very active participant. If the market comes down, that sector certainly will be there. I think on the other hand there could be oil and gas sector also which probably would face the brunt. I think the capital goods sector would also continue to reel under this kind of onslaught.
Q: On the earnings parameter, what do you think next year will throw up? How tough or easy do you think the earnings performance from the quarter gone by will be?
A: In this run up to this December quarter, I think the IT sector will possibly stand out. I don’t know how they will play out on the currency, probably we are not very sure. I think that the IT sector should probably do well.
Auto sector should do reasonably okay, especially the select ones like Bajaj Auto , Mahindra and Mahindra . Ofcourse, Maruti is going to be a washout even in this particular quarter.
Apart from that, I don’t any other sector stand out in particular. The banks, which continue to show better net interest margins (NIMs) than what they showed last time, will stand out. But the non-performing assets (NPAs) provisioning will be very closely watched over there.
Otherwise, I think it is going to be extremely mixed bag, extremely muted one as far as this particular quarter goes.
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