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Anish Damani of Emkay Stock Brokers said that this years lows may be retested but in the short term we may see a slight bounce back of 4%-5%. He rues that, with SBI increasing their deposit rates, others may have to follow suit and compromise a bit on the NIMs. He sees a slow down in infrastructure and construction spaces due to the rising crude prices.

Excerpts from CNBC-TV18's exclusive interview with Anish Damani:

Q: What is your gut feeling going by the macroeconomic fundamentals at this point in time? The price of crude is a little softer than what it was yesterday but it still looks ugly. The staring fiscal deficit, the oil bonds and of course the potential pressure on inflation and interest rates. Does it look that the year’s lows will be retested?

A: If this continues for some more time you might see the lows retested. But in the very short-term we might actually look in for a bounce back of about 4-5% where you might take a fresh view and still see if those same factors continue to persist.

Q: Sectorally where will the bounce come? What about banks? The bank index has taken the worst knock if you compare it across sectors?

A: In banking, there are couple of things that have happened. One is the fact that oil bonds are sucking out some of the liquidity from the system. Secondly the State Bank of India (SBI) has raised its deposit rates post the Cash Reserve Ratio (CRR) hike. All other banks were looking at cutting down on deposit rates to compensate further increase cost of funding. This will put a pressure on Net Interest Margin (NIM). So we were looking at a kind of a scenario where NIMs would have remained constant or improved. But now, with SBI increasing their deposit rates, others may have to follow suit and compromise a bit on the NIMs.

Q: What is your view on the infrastructure and construction space? Basically any space dependent on government orders with the current fiscal pressure. Do you expect any slowdown in your orders going forward in these spaces?

A: There is a possibility, with the way the crude prices are heading. Firstly, there is the issue of the deficit on the oil account and the inaction of the government to pass it on. Secondly the fertiliser subsidy and thirdly, the additional farm loan waiver. So there is a lot of pressures on the fiscal side and there could be some crowding out of the investments which could result in a slowdown, should these factors continue for some more time.

Q: Your view on these two sectors fertiliser and cement they have been in the news lately due to government action?

A: If you look at fertilisers the new policy has been talked about several times over the last one-year. So we will wait to see as to what would happen there. What kind of a price jump will it entail if that comes in for the farmers. It will take some more time before the cost could come down for a lot of them. It’s positive for a sector over a longer timeframe but we need to see that policy come in really.

Q: What will you buy now? Or will you not but at all?

A: I will still buy telecom, some of the IT stocks, Pharmaceuticals, FMCG and a sprinkling of stocks in the infrastructure sector and banks.

Source: Moneycontrol.com