|Rupee fall largely done; see scope for pullback: Kotak AMC Watch Video|
|21 Jun 2012, 10:31 AM|
Alroy Lobo of Kotak AMC believes global events are likely to determine the market direction ahead, with issues in the Eurozone remaining the key overhang.
The BSE Sensex opened lower on Thursday, tracking the sharp selling across Asian bourses. The Nifty index came close to falling below the 5,100 mark, and the rupee was sharply lower against the dollar.
Overnight, the Fed said it was extending Operation Twist to keep long-term interest rates low. But markets were disappointed by the move.
According to Lobo, Nifty may test support levels post the first quarter results, which he feels may be disappointing. On the positive side, he says, the rupee depreciation is largely done and he sees scope for a pullback.
The rupee fell on Thursday, coming close to a record low against the dollar, as risk assets fell on disappointment about the scope of US Federal Reserve's bond purchases and after HSBC factory data from China showed a contraction.
Traders are on watch for any potential intervention from the RBI to defend the currency. However, Lobo feels, policy transmission is more important than rate cuts.
Commenting sector-specific, Lobo says, the current correction in cement stocks is a good opportunity to increase exposure in the sector.
Cement companies are under selling pressure over concerns of a penalty for alleged cartelization. "I think many investors are looking for an opportunity to buy cement," he told CNBC-TV18 in an interview.
Among other sectors, Lobo is overweight pharma on account of rupee depreciation.
He remains underweight on Reliance Industries, citing limited upside for the stock.
"We also remain cautious on the banking sector," he says adding, the NPA cycle is still to bottom out.
Below is an edited transcript of the interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.
Q: Will the global liquidity carry us higher in the near term or are you circumspect?
A: I would say this
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