US Fed at least will do something about interest rates: Vallabh Bhanshali, Chairman, Enam Group

In a chat with ET Now, Vallabh Bhanshali, Chairman, Enam Group, says US Fed now will do something about interest rates in coming months and what the market situation at that point of time can trigger volatility. Edited excerpts

ET Now: Are you a bit surprised with the way the markets panic yesterday after the indian army's surgical strike?

Vallabh Bhanshali: Very frankly I was not surprised. I think we have to look at the overall assessment of the situation and the character of the parties involved. So I think market probably showed wisdom that at least all the longs got out and shorts may not have come in yet and I think so because this requires cool and quite assessment of the situation. The market did well by reacting.

ET Now: After a kneejerk reaction yesterday, today we may be looking at some sort of stable rates. But do you sense that this nervousness and apprehension in the market could actually get stretched over a period of time or do you think what transpired yesterday was at best a kneejerk reaction and markets are now going to move on?

Vallabh Bhanshali: See, we have to look at the nature of the parties involved, if we look at the history of our neighbour when,while we were doing Agra, Kargil was being planned and so on. So I think given the forces that dominate these adjoining democracy,it is very weak there and only thing they know is military engagement. If we are feeling that we were very surgical and balanced in our attitude they have never shown that kind of attitude so we do not know what to expect. Whether they are able to go one up or not but engage to expect that they will remain engaged in some manner and do something nasty I think that expectation will not go away easily.

ET Now: Last time when I interacted with you, you said that the long term story for India is intact. We are in a great situation, if I do on absolute and even a relative comparison. But you were not very comfortable with the valuations, so do you think correction like these should actually be welcomed rather than people should run away from them, because they give you those great entry points if you are a general long haul investor?

Vallabh Bhanshali: See in that sense now corrections will be looked at by long term players and so the correction has not yet created value in good quality stocks. But for whatever reason that happens I think that story will continue unchecked and unabated. So I still stand by that stand and we are talking about the current situation and the immediate reaction.

ET Now: So do you think a long haul investor right now should monitor this situation looking at the geopolitical developments or now is it the time to get a little bit greedy and whatever cash is there on the sidelines one should start deploying it. I am asking you very short term dominated questions but I hope you will appreciate my curiosity and the curiosity of our viewers?

Vallabh Bhanshali: The fact that whosoever sells finds buyers in the market that means there are buyers of the kind. So people who know there are counters well who know the value proposition very well they are ready all the days and I think they will get increasingly ready to pick up their counters but it cannot be said of the whole market. So you are going to see that selective support for selective stocks at certain prices.

ET Now: That really is the confusion in the market what do you buy on dips and do you stick with the leaders because NBFCs are getting a little toppish you could make the same case for even some select auto companies but these have been leaders, these have been performers, this is where growth is. So do you buy more of these names or do you look for newer avenues, do you buy IT because now that is cheap and may be growth is going to come back and one or two quarters from here?

Vallabh Bhanshali: Well, I am not really very knowledgeable about specific stocks and sectors but I think it remain India is very much a bottoms up market since 2014 November or so when the stocks ran up seriously and I think that is the story even now. So buying baskets, buying sectors has proven profitable for people but I am not really that category of investor and I do not understand that. So you must look at value proposition in each stock that you buy and obviously when the market moves as a whole big time those who know how to play the markets they can play the market but I may not be able to say anything beyond that.

ET Now: If I look at the striking feature yesterday, it was the big jump in volatility. It went up by about 35% and now if I look at the market performance, post Brexit markets have been in a linear trend both locally and globally. It is like saying that markets have manage to climb the wall of worry but do you think as we unwind the year as we go closer to December we could see a lot more volatility both locally and globally?

Vallabh Bhanshali: Given the fact that US Fed at least as it seems now will do something about interest rates in coming months and what the market situation at that point of time can trigger volatility. The world is not a stable place yet whether it be Japan and China or Europe or America and there are the whole commodity plays sometimes it seems to hardened and then it softens quickly again. So I think there are enough reasons for volatility in the world and we cannot remain unaffected even if our trajectory will remain upward bound. So I think this is the reality we have to face it.

ET Now: Couple of global events as well US dominated at that what the Fed does is still a big uncertainty and then of course you got the US Presidential election and it is a tough fight between Clinton as well as Trump do you think that could also play a very big role on how global markets are going to be dictated from here onwards and therefore have a rub off sentimental impact on India as well?

Vallabh Bhanshali: I guess the way US elections are run, they start getting discounted pretty soon so now we are only few weeks to go and each debate gives you a sense of what is going to happen and so on and so yes I think this is an well researched markets and the market does get prepared for stocks so this may be a minor one compared to what else can happen really.

ET Now: While we are on the topic of elections a lot of people are now touting the Uttar Pradesh Elections as being almost as magnanimous as the general elections. Do you think that could be a bit of a market moving event sort to speak assuming that the India-Pak situations douses for a bit now?

Vallabh Bhanshali: As we get closer to 2019 somehow the state elections will start becoming less important unless we see way forming or the results of those states forming a trend. I think it is increasingly difficult to say that state elections will dictate the centre because the centre has been pursuing a solid path even if the results that we would like to see are not forthcoming immediately but people generally recognise a solidity of their approach. The certainty of the direction they are taking and so on and therefore I think overall assessments of what is likely to happen in 2019 deciding upon competitive forces, quality of leadership in various parties, so I think as we get closer to 2019 that will become more important. UP elections is of course important but I think it will be relatively less important.

ET Now: The entire emerging market trade is making a comeback and the general sense is that central bankers have lot of liquidity and they will ensure that emerging markets will continue to go higher. Do you think that trade is open, that trade is here to stay?

Vallabh Bhanshali: I think while we all thought that central bank policies have got stale and there is nothing new to happen but the fact that the world has kind of remained fairly stable over the last eight years. I think it is giving new hope, that may be something is changing underneath and we may see better days. So as I said earlier I think the world has enough reasons for volatility and so I would not like to predict trend that okay emerging markets here are to rise for quite a sustained period of time that may not happen. It will be again market to market stories.