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Expect RBI policy to give some direction to markets: Sharmila Joshi

If we do see a rate cut, then people will be more positive on the market going ahead and if that does not come through, then I am afraid that some amount of disappointment might come our way.

ET Now|
Updated: Oct 26, 2012, 04.21 PM IST
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In an interview with ET Now, Sharmila Joshi of sharmilajoshi.com talks about the market consolidation and the upcoming quarterly results. Excerpts:

ET Now: What is the expectation for the month of November? Is that long phase of consolidation now going to come to an end?

Sharmila Joshi: I would hope so and starting next week, when we have the RBI policy, we could get some sense of direction. If we do see a rate cut, then people will be more positive on the market going ahead and if that does not come through, then I am afraid that some amount of disappointment might come our way. Then certain events are lined up overseas, including elections in the US and election of a new leader in China which will give some kind of direction even globally. So November will hopefully see us breaking out of this range either way. For now, I would hope that the markets are likely to aim higher rather than lower.

ET Now: At the time we had all those reforms announcements coming out from the central government, various people were saying that at the very least you will see the Nifty at 6000 by December end. We have not seen that happen, we have been in a bit of a prolonged consolidation phase. So would you say that if we got to even 5800, we should consider that we have actually achieved quite a bit?

Sharmila Joshi: Yes, absolutely. Even if this range of consolidation that we are seeing between 5650 and 5750 were to shift up another 100 Nifty points, that would be significant. We have seen time and again the markets coming here and turning back. So if we could consolidate at these levels, it will simply mean that we are building a ground to really move higher. So if it can consolidate at 5800-5850, it will be great.

ET Now: Let us talk earnings and specifically today from the banking arena. While you have some of the private banking names which have managed to keep their head above water, do you think ICICI Bank is going to follow suit? What is your expectation from Punjab National Bank even with all of these asset quality worries?

Sharmila Joshi: We have really seen a good set of numbers across the board and I expect ICICI Bank will lead from the front. So we should see a good set of numbers from them with both NIIs as well as profit coming up higher in 27%-29% kind of a range. They have shown their ability to manage problems better in a tough environment. We have seen it again and again, whether it is HDFC Bank, whether it is some of the smaller banks, we have seen it across the board. PSU banks on the other hand have been bit of a mixed bag and for PNB, I am afraid that we are hearing more and more concerns on the NPAs going up. So most concerns are weighing on PNB and we are likely to see the same divergent kind of a play out on both PNB and ICICI Bank.

ET Now: M&M is holding up in a weak market. Markets are taking very well to the kind of numbers. Do you think that in the auto space this would be a good bet to hold on? Some brokerages are talking about targets of even 850?

Sharmila Joshi: Absolutely. M&M and Maruti would be the two stocks that I would look at. M&M would be my choice for the kind of numbers that they have been giving. For M&M, it is the tractors which have proven to be a drag, but if going by the numbers, yesterday a really good set of numbers from M&M came out and that would continue to be the top pick.

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