ET Now In a chat with ET Now, Piyush Garg, EVP & CIO, ICICI Securities, shares his views on the market. Excerpts:
ET Now: Are the markets anywhere close to peaking out since that is the fear building in at 8000?
Piyush Garg: Looking at the screen, it is very difficult to say when the market would peak out. In my opinion, one should not try to guess the same as well. What one needs to have is a strategy in place as to what to do if the markets fall or what to do if the markets rise, rather than trying to predict on a daily basis.
On the face of it, it is clear that the market is headed higher and could be headed lower the next week. However, with a medium to longer-term view, broadly the market should be headed higher, which is being indicated for the last three-four months, after the 16th May election outcome.
ET Now: What should be a good strategy now - should a late entrant still buy into stocks or should they wait for a correction?
Piyush Garg: It is very difficult to answer that. If the person was waiting at 7700, it looked that the Nifty would touch 7400 and at 7400, it would have looked that we are going to 7200. It is a never ending cycle in terms of trying to predict where the market is.
Within the next 10 to 15 trading sessions, there is some likelihood that from wherever we are today, we could be 200-300 points down on the Nifty. In the past three months, the market has corrected around 300 points almost every month. So that kind of a correction is likely, but it is not a big correction. It is not a correction like 800-900 points Nifty down. So if you buy today, then you do not know when that level would come in and one needs to have a medium-term call.
Obviously if you are entering right now, it definitely makes sense to buy some protection as well. You could buy a, say, 8000-7800 put spread and just hold on to the position. Even if the Nifty falls 200-300 points, it is not that you are going to lose much because obviously these protections are coming cheap as the walls are down. One could trade that way and see how the market behaves in the near future as well.
ET Now: 8500 before Diwali and 9000 before 31st of December on the Nifty - is that a reasonable assumption?
Piyush Garg: No, there is no scientific way to calculate these numbers. Obviously, if the Nifty today is at 8000, then 8500 looks likely and at 8500, 9000 will look natural. Now whether it happens on Diwali or the New Year is difficult to say.
However, the market is factoring in a lot of positives at this juncture. It is not that, we are almost trading at 18 FY15 earnings multiple and it is not cheap anymore. Even a small negative news can take the market 4-5% down. The main negative news that had come in three-four weeks back was S&P falling and then even we had fallen from 7850 to 7550 odd levels. But otherwise if there is no bad news globally, then things would be fine.
We have the ECB meeting slotted for later this week and if they decide to go ahead with their quantitative easing, then that obviously would be a positive for India. Overall, as of now, there is no reason to believe that we are going to fall off the cliff.
ET Now: Are the markets anywhere close to peaking out since that is the fear building in at 8000?
Piyush Garg: Looking at the screen, it is very difficult to say when the market would peak out. In my opinion, one should not try to guess the same as well. What one needs to have is a strategy in place as to what to do if the markets fall or what to do if the markets rise, rather than trying to predict on a daily basis.
On the face of it, it is clear that the market is headed higher and could be headed lower the next week. However, with a medium to longer-term view, broadly the market should be headed higher, which is being indicated for the last three-four months, after the 16th May election outcome.
ET Now: What should be a good strategy now - should a late entrant still buy into stocks or should they wait for a correction?
Piyush Garg: It is very difficult to answer that. If the person was waiting at 7700, it looked that the Nifty would touch 7400 and at 7400, it would have looked that we are going to 7200. It is a never ending cycle in terms of trying to predict where the market is.
Within the next 10 to 15 trading sessions, there is some likelihood that from wherever we are today, we could be 200-300 points down on the Nifty. In the past three months, the market has corrected around 300 points almost every month. So that kind of a correction is likely, but it is not a big correction. It is not a correction like 800-900 points Nifty down. So if you buy today, then you do not know when that level would come in and one needs to have a medium-term call.
Obviously if you are entering right now, it definitely makes sense to buy some protection as well. You could buy a, say, 8000-7800 put spread and just hold on to the position. Even if the Nifty falls 200-300 points, it is not that you are going to lose much because obviously these protections are coming cheap as the walls are down. One could trade that way and see how the market behaves in the near future as well.
ET Now: 8500 before Diwali and 9000 before 31st of December on the Nifty - is that a reasonable assumption?
Piyush Garg: No, there is no scientific way to calculate these numbers. Obviously, if the Nifty today is at 8000, then 8500 looks likely and at 8500, 9000 will look natural. Now whether it happens on Diwali or the New Year is difficult to say.
However, the market is factoring in a lot of positives at this juncture. It is not that, we are almost trading at 18 FY15 earnings multiple and it is not cheap anymore. Even a small negative news can take the market 4-5% down. The main negative news that had come in three-four weeks back was S&P falling and then even we had fallen from 7850 to 7550 odd levels. But otherwise if there is no bad news globally, then things would be fine.
We have the ECB meeting slotted for later this week and if they decide to go ahead with their quantitative easing, then that obviously would be a positive for India. Overall, as of now, there is no reason to believe that we are going to fall off the cliff.
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