Market voice: Nirmal Jain, Chairman, IIFL

'Markets not to peak before the next quarter'

Nirmal Jain, chairman, IIFL, tells Krishna Merchant that since foreign institutional investments usually slow down in December, markets will be able to hit all-time highs only in the next quarter. Edited excerpts:

Given the last week’s surge, do you expect the markets to scale all-time highs in December?
It is difficult to speculate if the markets can touch all-time highs within a month or not. Foreign institutional investments (FII) normally slow down in December. From Thanksgiving to Christmas, the US is more or less in a holiday mood.

FII activity will now pick up in January. So, if the peak has to be attained, it will be more likely in the next quarter.

What are the trends you expect for FII in India in the coming months?
Foreign institutional investors are bullish on India. They will be investing in largecaps, or sectors where the underlying growth story is intact and are driven by domestic economic growth.

The largest sector that will attract FII money will be banking and finance. Banks are mostly largecaps, liquid and direct proxy of economic growth.

Other than that, a lot of money is coming through exchange-traded funds (ETFs) and index funds, which are getting into largecap index stocks. Money is also flowing into stocks like Coal India, which is a part of MSCI Index now.

I think Infosys Technologies and TCS (from the information technology space), M&M, Tata Motors and Bajaj Auto in the auto pack and ITC from the FMCG space will attract a lot of money.

What is your outlook on Reliance Industries (RIL), given its underperformance compared to the markets? Will it take the markets to new highs?
RIL is a largecap commodity play in several areas like refining, margins and exploration. This is not a stock that will go up or down significantly from the broader trends in the sector. Some large funds will always have weight in the stock.