Raamdeo Agarwal of Motilal Oswal Securities believes that markets are still on shaky grounds. Agarwal says that he can't conclude if the bull market is back or not.
Excerpts from CNBC - TV18's exclusive interview with Raamdeo Agarwal:
How does the market look from a value perspective after all that has happened till now?
It is still kind of getting adjusted to the huge correction in the market and still I think the ground is a little spooky, in the sense that it is not absolutely solid. One can extrapolate on the current strength present in the market. But one cannot take for granted that the bull market is back.
People are still asking questions as to what is wrong because typically the markets give an indication of something coming. Right now the economy is in good shape, corporate profits are in good shape but is there something, which we are missing?
What is your sense, could the markets be sensing something, which an analyst can't sense at this point fundamentally?
One thing is clear that the markets had run up too far too fast and beyond 10,000 it was very stretched and people had become desperate to see the correction, but then that is an India specific issue. But what has happened recently, is that there has been a global sell-off in all asset classes.
So it is the synchronised character of the global markets now and India is participating very actively in the synchronised fashion for the first time and for us it is a double shock that things can move like this. I think that is one source of trouble but if one looks at the global trade growth of above 9%, we grew about 30% in exports, 22%
So from here on I think markets will become much more stock specific and one has to be very cautious and the energy, which was there, as a completely blind bull, is clearly shaken.
What is your sense of these global cues, the sort of risk aversion that there is at this point, liquidity has really dried up, is this going to be a much longer phenomenon or do you think it is a scratchy patch for most emerging markets?
It is very important to know what is happening in the global economy and the impact. It is a very important factor, which is not knowable, however hard we try. Disproportionately large amount of time is going into reading about them and trying to think about them and arriving at no conclusion. It is better to again rechannelise the energy into understanding the individual companies, their own valuations and see how patiently one can wait.
Do you think the reenergizing would happen for midcaps considering the hit there?
Everything will happen, just because something is smaller in size it does not mean anything. They are also earning the same green bucks. Obviously the market has a way to look for small companies, where the valuations are not as stretched as the larger companies.
The larger companies always are at some kind of premium to midcaps, but once this sell-off has happened and excesses are curtailed to some extent, I think midcaps have their own story to tell.
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