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Deven Choksey of KR Choksey Securities said fund managers have postponed buying due to nervousness on the crude oil prices and subsequently weakening of the rupee. "Volume are also very weak, so maybe we will see some amount of consolidation on the Sensex between 16,600 on the downside and around 17,700 levels on the upside in the next week or so and then probably take a further direction of the market."

Excerpts from CNBC-TV18’s exclusive interview with Deven Chokse:y

Q: Do you think there is more downside from here?

A: We see a postponement of the buying activity from some of the fund side largely because of the nervousness happening due to the crude oil prices and the weakening of the rupee. Most of the people are apprehensive. If the rupee weakens further, then the inflow of funds into the Indian market may halt for a while.

At the same time, the worry is that if the rupee is not going to remain stable and weakens further, there will be some amount of withdrawal of funds. But that is slightly far off. But at this point of time, the buying decision has been postponed. The people who started churning their portfolio to some growth-oriented stocks have slightly put off their decision. That is what we have seen at the beginning of the week and continuing now.

Volume is very weak. So, I am not sure whether it will go all the way down to that level. We may see some amount of consolidation between 16,600 on the Sensex on the downside and on the upside around 17,700 levels in the next week or so. Then one can take a further direction of the market.

Q: What is you take on ITC?

A: I don’t know if one should be buying this particular stock. If the portfolio has to be a defensive portfolio then this particular company is promising from the current year point of view. The fall below substantial level at Rs 200 levels could be definitely meriting buy opportunity.

But even technically close to Rs 200, there would be some amount of support coming in if one wants to buy. So, this is a company if one wants to buy and keep it in one’s portfolio for 18-24 months from now. It would be a good opportunity if it falls further.

Q: Why have banks taken such a bit knock today?

A: The nervousness is largely due to the new disclosures that are announced and being introduced.

Unfortunately in a subdued or nervous market in India, the victims are some of the banks. As I see it, most of the banks are not going to have too much of a problem going forward though there would be a challenge on the lending side. But at the same time, they should be better off in subsequent quarters. At this point of time, it is largely due to nervousness.

Q: Did you look at the Ashok Leyland numbers?

A: I went through them briefly. They are better than the expected numbers. To a certain extent, it surprised me as well. Going forward, one will have to watch how the volumes increase and then one can take a larger call on it.

Q: What are your HNI and retail clients telling you? Do they want to buy in this market?

A: Across the board people are not interested in buying. Some of the banking and capital goods companies and selective realty plays like Mahindra Life, DLF and Unitech, such stock specific ideas are definitely selling well and people are interested in putting further money. So, that nervousness is probably asking them to go a little sober. If the market remains steady, the money probably will come in force.

Q: Reliance Power has come to Rs 420. Is it just buying ahead of the ex-bonus date or is there something else cooking here?

A: It is a buying before the ex-bonus. There are too much of developments happening which are going to take the profits up for the company in the coming two-three years. I do not see that happening at this point of time.

Q: Are people veering towards safety with these FMP kind of products? Are they still happy to hunt for equities?

A: Those who are pure equity-minded people definitely come to equity. They do not normally go to such kind of a product. At the same time, people are cautious. So, obviously they are not coming full hog into equity. They are waiting and keeping 20-30% on the table and then investing at this point of time.

I do not see too many people moving to the future fund at this point of time. FMP, in particular, is definitely inviting some amount of interest. But it is not the kind of crazy interest. For example-a down equity market would like to go into a particular space and that is not happening at our end.

Q: Is there any interest that you have picked up on textile stocks?

A: Not really because this is something which is happening as a seasonal flavour. The moment we saw the rupee giving some breather, they immediately started giving its interest back into this counter. I am not very sure about how it will help them over a longer period of time because if the rupee is going to depreciate on a sustained basis then to a certain extent they will start making some amount of profit in subsequent quarters. But I am not very sure whether it is going to be so soon and so fast.

Q: The Ashok Leyland numbers did not look too bad. They outperformed on sales and profits but the stock has tanked. Where do you stand?

A: The numbers have basically not grown on the volumes. But the realization has grown up and it has grown largely because of the contribution coming from the bus segment and also from the medium and heavy-duty commercial vehicle segments.

So, to a greater extent, the shift in the market has been largely to such kind of vehicle where the contribution is on a higher side. Going forward, if we find that the interest rate scenario remains comfortable, probably this company is best positioned for the coming times. In such a situation, it would be a good buy opportunity. It has gone down basically because of a lack of confidence of sustaining the auto sector given the kind of high interest and high cost scenario in the market for which it has gone down to a certain extent.

Q: What is your call on technology given the kind of sell-off we have seen today?

A: It is in a valuation trading zone and we have hit the higher end of valuation for the time being. With Infosys quoting at a P/E around 18 plus one will have to wait and see before it comes down to around 16 levels to buy it afresh.

Disclosures: It is safe to assume that my clients & I may have an interest in the stocks/sectors discussed.

Source: Moneycontrol.com