ET NowIn a chat with ET Now, Yogesh Mehta, VP & Group Leader - PCG Advisory – Equities, Motilal Oswal Securities Ltd, shares his views on the markets and some sectors. Excerpts:
ET Now: When the world is cheering up, what is leading to this kind of selling in the Indian markets?
Yogesh Mehta: Yes, but there is nothing to worry about the markets because we are not enjoying the party right now. We have enjoyed the party throughout the year. So it is time for relaxation at the year-end.
Probably, there is a mix effect of global cues with some worries on the interest rate side. Global funds are flowing into emerging markets and are on a rate hike mode. So a little cautious mode is there, but we have not seen serious selling from the FII side in the cash segment or on a delivery basis. But towards the closing of the accounting year, unwinding of position is happening and there is a lack of buying both from the domestic institutions and HNIs.
ET Now: Are you telling your clients that they should cut their positions, they should square up their positions because of year-end compulsions?
Yogesh Mehta: No, not like that. The traders which have to have compulsion of keeping their stop losses need to cut their positions because investors need not worry about the market. Still, two to three years of bull run is there and we are just 7.5% kind of correction from the top. So, for investors it is not a worrisome market, but for traders we are a little cautious, especially on the long side.
ET Now: What do you make of some of the PSU banks? The way PSU banks have collapsed in the last six odd weeks, it appears that someone is really dumping these stocks.
Yogesh Mehta: True, it seems like that. But more or less none of the people, neither the institutions nor the HNIs are in favour of the PSU bank basket right now because so far no news flow is there.
It shows how the profitability will flow for the final year-end FY14-15. That is where the question mark is, but otherwise on the fundamental valuation, they are still available very cheap compared to the valuation gap between the private sector bank and the public sector bank, which is now widening day by day. But once clarity comes post the first quarter of the next financial year, probably that time people may look at public sector banks as an attractive level to enter.
ET Now: When the world is cheering up, what is leading to this kind of selling in the Indian markets?
Yogesh Mehta: Yes, but there is nothing to worry about the markets because we are not enjoying the party right now. We have enjoyed the party throughout the year. So it is time for relaxation at the year-end.
Probably, there is a mix effect of global cues with some worries on the interest rate side. Global funds are flowing into emerging markets and are on a rate hike mode. So a little cautious mode is there, but we have not seen serious selling from the FII side in the cash segment or on a delivery basis. But towards the closing of the accounting year, unwinding of position is happening and there is a lack of buying both from the domestic institutions and HNIs.
ET Now: Are you telling your clients that they should cut their positions, they should square up their positions because of year-end compulsions?
Yogesh Mehta: No, not like that. The traders which have to have compulsion of keeping their stop losses need to cut their positions because investors need not worry about the market. Still, two to three years of bull run is there and we are just 7.5% kind of correction from the top. So, for investors it is not a worrisome market, but for traders we are a little cautious, especially on the long side.
ET Now: What do you make of some of the PSU banks? The way PSU banks have collapsed in the last six odd weeks, it appears that someone is really dumping these stocks.
Yogesh Mehta: True, it seems like that. But more or less none of the people, neither the institutions nor the HNIs are in favour of the PSU bank basket right now because so far no news flow is there.
It shows how the profitability will flow for the final year-end FY14-15. That is where the question mark is, but otherwise on the fundamental valuation, they are still available very cheap compared to the valuation gap between the private sector bank and the public sector bank, which is now widening day by day. But once clarity comes post the first quarter of the next financial year, probably that time people may look at public sector banks as an attractive level to enter.
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