Anil Manghnani , Director, Modern Shares & Stock Brokers believes that while the market may top out maximum at 5400, it seems to A bit of a flattish close yesterday, 5131, last day of the week, how do you expect it to pan out? It will probably be subdued trading now, last two days markets not been able to hold onto the intra-day gains. There is a little bit of, not fatigue but little bit of pause, I mean remember the market has gone from 4800 to nearly 5200 in four trading sessions as such. So, some pause even today may be more stock specific action but I would say whether we top out at 5200-5300-5400, I am not sure but this time around I feel we are setting up the base for the next fall. Without sounding overly bearish, what I am trying to say is the last two occasions we were at 5100, you did not get the sense that the retail participation was there, momentum stocks were not moving, speculative action was not there. You had voices where there is the redemption pressure, it is very rare in India. You hear markets at a new 52-week high and redemption pressure but that seems to be subsiding now. The scepticism seems to be a little bit off now and the people are coming back to the market. So even though this Nifty may have some leg on the upside, I just feel that now with the participation increasing there will be more risk which will create the excess for the next correction. So you will see movement but there is going to be some sort of creation of the next fall. It will be difficult to understand, I mean to explain but now is the time to be careful in this move to 5300-5400 where the excesses are going to be created. The next time the fall comes, you will get that 15-20% correction. Every time we get a fall of let’s say 300-400 points, everybody talks about that 20% correction and the market bounces back but this time around we are creating that sort of scenario where we will be susceptible to a fall. Stock specific in this session and you are looking at real estate, that is your target on the sell side? More so from the fact that they are weaker sectors and they have had a nice bounce from the lows of Friday. So anywhere close to 94 to 100 sort of levels is a good range to exit Unitech, especially you are stuck earlier or you bought on Friday. So that would be a range for me. You sell between 94 and 101 and your lower target should be back to 86 and 80. Even weaker than Unitech is DLF because that actually went and made a fresh low in the fall of Friday. When I say fresh low to October end lows. That is more weaker, so 388 to 402 would sort of be the profit booking or exiting zone if you are stuck with a view that the stock will fallback to about 370 and 353 levels. | |
'Emerging mkts to provide strong returns'
Allan Conway , Head, Emerging Markets, Schroders believes emerging markets will continue to be strong performers in the next year too. It appears that at global level, markets are now ready to buy risk because of dollar carry trade, significant inflows are now coming to emerging markets? The first thing I would point out is that when we talk about buying risk, in the past investors viewed emerging markets as risky assets. The fact is there has been a re-appraisal of risk in the marketplace. We would actually argue that the risky assets now are the US equities, European equities, Japanese equity markets. The safe haven equity markets are actually now the emerging countries and this re-appraisal of risk is causing a lot of increased interest in emerging market investment. One of the things that I do in some of the presentations I make is I give investors an example of a country, I call it country X which has very bad fiscal position, poor current account, depreciating currency, low level of reserves, high reliance on foreign capital to finance its debt and I asked investors which they thing country X is and in the past everyone would have said that is an emerging country. Today that country is the US. The US today looks more like an old fashioned emerging country and today’s emerging are much-much stronger. So there is re-appraisal of risk now going on in the marketplace we believe. But if you really analyse a market like India, we have got $15 billion of institutional inflows in the year 2009 and that is some kind of a record, how much do you think the current inflows for Indian market are actually because of dollar weakness? You must remember that the inflows you are seeing this year are after some very significant outflows last year. If we take emerging as a whole, the data we see is the money that is coming to emerging in total this year is only a fraction more than the total that came out last year. So net over the two years it actually broadly flat. Now obviously the weak dollar has encouraged the carry trade, positions that you are starting to see. However we would argue that a lot of the money going into emerging markets is now particularly coming from institutions rather than retail because institutions are now looking at emerging as strategic investments rather than tactical. So carry trade has a real but much more important has been this reappraisal of exposure to emerging and acknowledging that they are much stronger than the developed and institutions moving to a strategic allocation. To actually draw parallel here, the yen carry trade lasted for years before it went burst, what is your sense, will the dollar carry trade also perhaps exist and coexist for another five six years more before it actually fades away? We should expect to continue to see dollar weakness. There will obviously be short time periods, short periods where the dollar has a bounce but there are three underlying factors that would give you ongoing dollar weakness, one is obviously the economy that is low growth, high debt, underlying, weak economy in the US, indeed this crisis is probably knocked off 50 basis points from their trend growth. | |
Src: Economictimes.Com