Mumbai blasts: Minimal impact on markets

Sanjay Dutt of Quantum Securities feels that although yesterday's blast incident in Mumbai was pretty bad but as far as markets are concerned, the impact will be minimal.

Dutt opines that the markets will close marginally positive, if there is good guidance and numbers from Infosys.
He further states that if the market sells off 300-400 points, then there will be a lot of buying coming in. As the market is light right now, there could be a major unwinding because there aren't many positions in there.

Excerpts of CNBC-TV18's exclusive interview with Sanjay Dutt:

How have you read the events of last evening and how hard do you expect it to impact the markets today?

What has happened to Mumbai is pretty bad but as far as markets are concerned, the impact will be minimal. We may sell-off early morning and then stability will return. I think the Infosys results and the outlook ahead will drive the sentiment. Whatever panic sell-off one might see due to sentiment at this point of time would be bought into.

I would be little worried about some of the newer overseas funds who don't know India well. They may want to get out but I think that the impact will be minimal because at this point in time, the markets and the F&O positions are light. There isn't much of speculative activity, and froth is already out. So I don't see a major sell off; it could be around 5-6 per cent.

If Infosys delivers numbers, which are slightly ahead of expectations, then can we get away with something like 200-250 point kind of fall for a knee-jerk and no more than that?

If there is positive outlook ahead from Infosys and the ex-bonus date is just round the bend, some amount of adjustments take place right now. I won't be surprised if we close marginally positive if there is good guidance and numbers from Infosys.

I know a lot of people who are ready to buy on dips at this point in time and have cash ready. So if the market does sell off 300-400 points, then there will be a lot of buying coming in. As the market is light right now, it gives me comfort that we want to see; there would be major unwinding because there aren't many positions in there.

But if Infosys doesn't give a positive surprise with numbers, then do you think the markets back might break because the pressure of these two events might be too heavy to handle?

Even then, I don't see a fall of more than 300-400 points; we may see 10,100-10,200. Thereafter, we would want to look at numbers. So all in all, the key element is that the markets being light at this point of time and the reaction of some of the funds that recently entered India haven't got the expertise to handle the situation.

There have been quite a bit of momentum players already out of the system but some are still in. So one may see some selling coming in from them and so I also see a 300-400 points fall.

Since last night, whatever has been happening amongst planners, policy makers and people in the government, I think they are already geared in and planning steps are being taken to ensure there is adequate liquidity in the system. There will be enough government support to stem whatever fall might happen in all financial markets; in terms of currency, bonds or equity markets.

If you step back from last evening events, how have you read the way markets have moved in the past few days? Are there signs that it is consolidating and trying to find its feet?

Absolutely, we have seen good consolidation action up 200 and down 100. I think it is excellent consolidation that one is seeing in the markets. We have seen weak hands coming out of the system totally and F&O positions comprise mainly of FII positions. I think this is a very good basing action.

Once the numbers are out of the way in another 2-3 weeks, then one may see select stocks edging up based on earnings outlook and the entire business picture for the company. It will be a selective market ahead but bias is definitely upwards. A lot of funds at this point of time are in the process of raising money. Domestic liquidity is fine and the interest rate equation is already there in the price and everybody is expecting a 25 basis points hike. So the key issue now are the numbers.

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