"What would be your advice for investors?"
'Keep it simple. Don't panic.'
"Fundamentals of any of their (Adani Group) companies have not weakened because of the fall in their market price. If the fundamentals of (Adani Group companies) remain as strong as they were one week before, then I don't think there should be any cause for panic," Deven Choksey of K R Choksey, a well known stockbroker and investment house, tells Prasanna D Zore/Rediff.com.
How is our market poised given that the Nifty fell by more than 500 points in the week before the Budget?
According to me, Budgets have now become predictable events. It is more about allocation of resources by the government. Markets already know that this government has allocated huge resources for building capital infrastructure and boosting demand in the rural economy.
I don't think people now look at the Budget as an event that would bring fear or surprise the markets.
Unfortunately, because of reasons other than fundamentals, the markets took a beating last week.
The fundamentals of Indian markets were as strong last week as they were before and even before that.
I don't think one can call into question the fundamentals of the Indian economy and equity markets into question at this point in time.
The technicals have definitely weakened and that is the nature of every market. And that leads to correction. That is what is happening currently.
You are looking at the market fall from a high of 18,900 in the third week of November 2022 as a technical correction?
The fall which we saw in March 2020 (due to the COVID-19 pandemic) was a serious fall and then the markets bounced back. There is no reason to believe that this time too we will not bounce back.
Are you expecting more correction in the days after the Budget?
The panic part of this market fall was over on Friday (January 27, 2023, when the Nifty 50 index fell 287 points or 1.6 per cent and the BSE Sensex fell 870 points or 1.45 per cent and when the Adani Group shares fell between five to 20 per cent).
Will FIIs continue to sell?
Panic selling is over, but one of the key factors for the markets to hold up would be that the FII selling should stop. They have been selling aggressively whenever they got an opportunity.
They sold Rs 18,000 crore (Rs 180 billion) which is almost close to $2.5 billion -- of equities on the gross basis and on the net basis they sold some Rs 6,000 odd-crore (Rs 60 billion) of Indian equities (on Monday, January 30).
I have always maintained that FIIs need to be distinguished as those who are investors and those who are traders. Currently, what is being sold is done by the FIIs who are traders and not those who are investors.
Unfortunately, our (market) regulator (the Securities and Exchange Board of India) and the media are not making this distinction (when they report the value of equities sold by the FIIs).
The general public gets a feeling that foreigners (the FIIs) are leaving the country (selling Indian equities).
IHC yesterday (January 30) invested $400 million in the country (in the Adani Enterprises' FPO). So, are they leaving the country or are they investing in the country?
The point I am making is only the (FIIs, who are) traders in the market are selling; not the (FIIs, who are) investors.
Why should we say foreign institutional investors? Those (who are selling) need to be categorised as foreign institutional traders because they are in in for trading gains.
Do you see more panic selling in the days ahead?
As I see it, most of the panic is over. The market is now comparatively lighter than what it used to be. Not many major positions are carried over as we go into Budget day.
Is the fall in the shares of Adani Group companies a cause for worry for retail investors?
Fundamentals of any of their (Adani Group) companies have not weakened because of the fall in their market price.
If the fundamentals of (Adani Group companies) remain as strong as they were one week before, then I don't think there should be any cause for panic.
Is the market reacting to the Hindenburg report?
That's true.
Auto (up 1 per cent on Friday) and FMCG (up 0.46 per cent on Friday) saw quite some buying even as the broader markets saw selling. Is this sector rotation happening?
Fortunately, markets have started recognising the fundamental strength of the auto sector. And that is what I think is a healthy sign. The auto sector was neglected (for some quarters) but now its fundamentals are being taken into consideration.
The FMCG sector gets its strength from India as a consumption story and there is more strength left in India's consumption story.
Your take on mid-caps and small-caps...
They have always been the poor children. They are the first to get punished every time the markets fall.
Unfortunately, mid-caps and small-caps are used more for trading purpose. So they are in weak hands and whenever there is panic in the markets the weak hands will exit first.
What would be your advice for investors?
Keep it simple. Don't panic.
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