'Overall liquidity seems to be sufficient'

Q&A: R Venkataraman, Executive Director, India Infoline

R Venkataraman, executive director, India Infoline, talks to Rajesh Bhayani on the likely triggers for the stock market

Is the post-Budget rally strong enough to sustain the momentum or is it a relief rally?
The improvement seen in the market since the Budget looks more like an upmove and not a relief rally, but it is a bit early to judge. Even investment flows from foreign investors have improved. If there is a strong momentum, it is yet to play out in terms of higher volumes. Now that the Budget-related uncertainties are over, the market seems to have settled down.

Globally too, the markets have seen some improvement. Can we say that the worst is over for now?
While it is true that global markets have shown an improvement, they have a tendency to surprise markets and players. If there are no negative surprises in the coming weeks, the recovery will continue in the Indian market.

Do you see a liquidity crunch due to the NMDC issue and advance tax payments? Will it pull down the market?
The overall liquidity seems to be sufficient to absorb temporary tightness as long as such situations are known in advance.

While specific initial public offerings or follow-on offers and advance tax events are known and hence discounted, flows from foreign investors have resumed and it seems will continue. Even domestic institutions will add to incremental positive flows.

What are the triggers that can move the market in coming days?
Fourth quarter corporate results and the monsoon are fresh likely triggers. While the impact of the monsoon is not known, indications about results are that the momentum seen in the last few quarters will continue.

Despite the rise in inflation, interest rates have not gone up to that extent and for companies, interest rates matter more than inflation rates.

Companies have been saying that recruitments have also gone up and earnings momentum has been maintained by and large. Any surprise on the global front may also act as a trigger.

Which are the sectors and companies you recommend for investments?
Power, infrastructure and agriculture are some of the sectors to watch.