Expect market to be in range over next 6-9 months: Pankaj Sharma

Talking to ET Now, Pankaj Sharma, Market Expert, says he does not expect market to give a plus/minus 10% in next 6 months.

Edited excerpts:


Do you sense a 5% upside for the index in this festive month of Diwali festivities?

If the FIIs continue to withdraw in October, which is likely, I do not think the 5% upside can play out. But the good thing is that for the Indian public in general, the investment options are getting more and more limited. You cannot put money in gold. Real estate is already doing very badly. It is very unusual that you have almost 20% kind of return in the market and FIIs are net sellers. This tells us that the relative attractiveness of equities is still there. Considering the bad news in August, September -- I do not think any successive two months have been that bad at least for last couple of years -- that 5% upside may not materialise but I also do not expect that it could be a significant 5% to 7% kind of decline in the market. So more or less in the same range I would expect.

Define medium term.

I believe medium term is something like 6 to 9 months and anything above 12 months would be a long term.

You mean to say for next 6 to 9 months you do not see markets going higher or lower.

I do not expect that market would give you a plus/minus 10% in next 6 months.

Bull markets correct, bull markets go up and down but they rarely consolidate for 9 months.

That is a good point. My sense is that you might see a situation where the data points which we have had in August and September may not improve because I do not expect that there is going to be a significant reversal or revival in earnings in at least the second quarter and also the second quarter GDP number would not also be very great.

If you look at the rainfall distribution, an estimate by Ministry of Agriculture says that there would be a 3% kind of decline in food production and 4 out of 10 food producing states including UP, Haryana, Punjab are rain deficient.

We will start to see this impact around November and that is something which makes me believe that we are not going to see a fundamental improvement in data points in next couple of months. It is going to be same kind of things which we have seen in September. You would see a 4-5% kind of correction and then you will again see the market bouncing back. So this is not something which is going to change in next six months at least I believe.

Coming to the move on Dr Reddy’s and Aurobindo this afternoon, do you believe that structurally these are the two names that really stand out in the ailing pharma story and are these the names that you are recommending? Dr Reddy’s has of course come off from the day’s high. It is now in the red but it was a newsmaker in the first half of the session?

Yes, pharma is definitely looking like a sector where things will not be as bad as they have been. However, in terms of individual stock picks, there has been a lot of bad news and a lot of bad sentiment around Sun Pharma. If I take a 12-18 months kind of a view, this stock would probably be doing better than some of the other names.

Of course, DRL or Aurobindo are not bad choices but I would probably also include Sun Pharma in that list and I believe that if you play these two or three large caps in that space, things will be good because overall if this sector does well, then at some point in time, people would start to get a little more excited about the Sun Pharma stock because in terms of size and business, it is one of the more important companies in the space. I would also include Sun Pharma in that list and pharma sector definitely in the 12-18 month timeframe, looks good.