Consumption and IT are emerging as trends. Again these are not going to be runaway index moves but rather they are going to be c alibrated moves, says Atul Suri, Marathon Trends – PMS, talking to ET Now.
Are any of the financial charts looking toppish in the sense that you want to book profits there? Where is the opportunity to reverse course and take some money off the table?
I am not bearish in the markets. So for me, rather than sitting on cash, it is more an opportunity to deploy cash. I have used this correction to aggressively get into the sectors I spoke about earlier. I am really not about booking out but still I feel what will happen is that one will be getting out of spaces or sectors which will come under pressure due to this commodity and currency or these macro issues.
So, there is going to be more shuffling. I do not believe that one should sit on high cash because my experience in our markets has been that we are horrible at predicting global events. When I was to meet clients three months ago, the Nifty was around 10,000 and they were very concerned about North Korea, South Korea and people were pre-empting a nuclear strike and Nifty at 8000 and today those very people are talking about a Korean unification.
Now people are talking about Karnataka results. What is our ability as individuals? Even those guys who are there, do not know what is going to happen. So what is our ability and then more importantly, is what is the impact on the market? These things are always great stories, great media headlines but we should do what we know and that is markets and prices which are in front of us and which is a reality.
I feel going ahead. you will keep having these ups and downs. That is why I said that you are not going to have a index move but more importantly, stay invested. We are a part of a longer bull market but make sure you are in the right spaces.
Rakesh Jhunjhunwala says you got to follow the trend where the trend will end. nobody knows! The trend will show its end by price performance. Where do you think the price performance is still very strong and where do you think that price performance seems to be indicating that the trend is nearing its end?
If I look at the IT index, I feel there is a 20% kind of upside in the index. Most people will say oh! 20% is nothing because we have been so spoilt with what has happened in the last few years and in this 20% index move, you will find that a lot of stocks in the midcap IT space look even more promising. So, I feel that at the moment based on prices as they are today that seems to be an emerging trend.
That is something is there where the trend is ended. Again, I do not think anything is topping out right now. But I think one can go and pick PSU banks. They will bottom out and they will go up. Even in the case of pharma, they will bottom out. It is a great sector to be in, but when it will happen I dont know.
I feel that the consumption and IT is a trend that is emerging. Again these are not as a market stands right now; they are going to be calibrated moves, they are not going to be run away moves. We are not going to see a runaway kind of bull market. Rather, there will be calibrated moves. But even in this calibrated moves, there will be opportunities. These are the two themes that I would play out on.
If you are planning your vacations, you have to keep one eye on the currency. It seems we are walking towards 67. What is your view?
Definitely, currency especially Indian bond yields and Indian currency are both not on a good wicket. The rupee is heading towards 68, it has had a very sharp move actually from 65-66 to 67 and is now going towards 68.
It may be less spiky, it may be a little slower but yes, the Indian bond yields also are creating a little bit of pain and panic and the Indian currency has spiked up when the dollar index has been actually benign. Now I find that the dollar index also has broken out a bit from a rectangular pattern. You are going to have actually a stronger dollar and that is going to put this next leg of pressure on Indian rupees.
So things are not pretty as far as the Indian currency and bond yields go. The Achilles' heel for this market or the pain point is going to be banks. While the Nifty, which may be 4% from its life-time highs, the banking index is 11% from lifetime highs. So you can see the level of underperformance and the whole banking space has now come down to just three-four stocks.
Banking has always been a lead indicator for our markets. If you ask me the point of concern or where I would look for problems, it will be banking and the Bank Nifty. If the Bank Nifty does not perform or does not catch up with the Nifty, you will not have any runaway markets. You will in fact have a lot of pain and pressure and that is something which one has to look out for and that is going to be the lead indicator for our markets.