Despite the extreme pessimism and bearishness, Andrew Holland, CEO (investment advisory) at Ambit Capital told NDTV Profit that the Nifty may hit the 5,700 mark at some point of the year.
Holland based his optimism on two factors. If commodity prices remain at these levels for an extended period, it’s good news for markets, he said. From the beginning of the year, oil prices have fallen over 30 per cent, which is good news for India, he said.
Markets are also hoping for policy initiatives at the EU summit in Brussels on June 28-29, Holland said. I am not sure what they will do, but they should start recapitalization of all banks in Europe, and re-purchase bonds that will drive bond yields lower. That will help the markets, he said.
Here is the edited excerpt.
Market strategy: If the ECB manages to do something positive, you will see a good rally in markets, but if there is a disappointment, all markets will fall, which will be a good time to buy.
Valuations are attractive: Valuations are getting to the point that we saw in 2003 and 2008. So, if markets fall to December levels, it's a great entry point.
Rupee: The Reserve Bank is doing nothing about the rupee weakness, and that is spooking investors. When you have a lot of uncertainty in currency markets, it starts to get into people's mind. No one seems to have the answer as to why the rupee is falling sharply. Everybody thinks something bad will happen, something out of control of India will happen.
Commodities: The fall in commodity prices is telling us that there will be no new big push for liquidity, and because the economy has taken a downturn, so money is being taken off the table in risk assets.
Global economy: There is negative growth in Europe, the Fed says its range of growth is 1% lower than what it told last time, and China and India are slowing down. Each time there is a liquidity fix, there is a euphoria, and then we need another liquidity fix. So, even all this liquidity is not helping.