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Deepak Chhabria, Director-Equities, Collins Stewart Singapore said the market is in a consolidation phase, and is likely to remain ranged. "The Nifty is seen ranged between 4,700-5,200 for few months. Institutional participation continues to be on the lower side."

He feels the Nifty may not go down to 4,500, but may stop around 4,700-4,800. "We may not see sharp falls given the low leveraged positions. However, we need to watch for crude prices."

According to Chhabria, investors can pick stocks for the long-term.

Foreign Institutional Investors are not expecting huge upside, but are looking at booking profits, he added.

Excerpts from CNBC-TV18’s exclusive interview with Deepak Chhabria:

Q: How have you read this week’s action globally and locally?

A: We are in a consolidating market where we bounced off from the lows of 4,500 and went to as much as 5,200 or thereabout. In the near-term or even for the next 3-4 months, markets will be in a range between 4,700-5,200. We are seeing a bit of a pullback. The move up from 4,500 has seen a few positives. There is not a significant leverage added to the market. But at the same time, we haven’t seen any great volumes or great participation from international players. So, there is some amount of disbelief, which is going to play out into corrections into the markets. So, at higher levels, we are seeing people shorting the market and taking a hedge against current portfolios. My best guess is this market will probably be in a range between 4,700-5,200. In extreme situations, there may be a hard stop at may be 4,500 based on information that we have today.

Q: Are you saying that it’s not completely likely that we go back and retest the lows from where we bounced off?

A: Situations have to go back in terms of leverage and in terms of corporate earnings to wherever we were in terms of sentiment at 4,500. Obviously, newer factors such as oil being on the boil and whether that sustained at these current prices or even at higher prices is another trigger, which could take us down there.

But I don’t think that based on information that we have today, 4,500 is eminent or possible immediately. You will probably float around in a range of 400 points on the Nifty.

Q: How are you reading the global turf right now?

A: Surely, we saw a bounce from the base that was created by the subprime crisis in the US. We have seen markets recover from there. Equity markets have seen some flows and we have heard a lot of noise that the worse in the crisis in the US has already been seen.

So, we have seen a bounce on the back of that. We are seeing more money going into commodities because those markets are still vertically moving; particularly oil. So, a lack of cash and very low interest is going to keep the equity markets rangebound globally.

Q: What is happening with flows? How do you read the liquidity situation right now for May?

A: I don’t think people based on corporate earnings are expecting a huge run up in this or maybe in the next quarter in the Indian markets, taking advantage of the near-term rally, booking profits or even churning portfolios. So, it’s a good strategy to get out of sectors that you are looking at.

I wouldn’t say that people are getting out in a big hurry or there is a real situation to sell India going out with the international investors.

Q: Is the rupee making global investors a bit nervous out there?

A: I don’t think it has reached a stage of acceleration where anybody is nervous. Most people, given the volumes in the Indian market, were anyways sitting on the sidelines. This will make the Indian markets more attractive for investors who are sitting on the sidelines.

So, maybe 42-42.50 is probably where people will see value in coming back. On the longer-term trajectory, once the inflation that we are seeing is corrected, you will see the rupee appreciating against the dollar.

Q: How are you approaching this spike in crude and the oil sector in India?

A: There are two scenarios. One is that this is a momentary speculative news driven spike and it will correct back to levels we saw about a month back or so. In that event, you will see this as volatility in stocks and come back.

If the rise in the oil price is here to stay and get more aggressive from here, then you will obviously need some part of that passed on to the consumer in India. That action will ultimately stabilise prices of these companies.

So, there has to be either through action on correction and passing of inflation or through the actual change in the price of oil. On the short-term, they will go down on the fear that oil price hikes may not be able to be passed to the consumer in India. That is really the fear that is playing in these stocks going down.

Q: Is there nervousness on Bharti because of the MTN deal? Have people come to terms with it after the initial scare?

A: It is a bit of initial volatility. As people get to know more, things will stabilise and see the value over doing this in the longer-term.

Q: In the near-term, do you expect the market to remain in essentially a 1,000 points range for the Sensex?

A: Yes, barring any unforeseen news which could take us back to test 4,500. If sentiment and further news on commodity prices on flows worsens from here and go down from 4,700 to 4,800, take a stop there. But if newsflow gets really bad then we will go down.

We have very low leverage and low participation. The market will not slam down 5% in a day. That is very unlikely, given the leverage we have on the market today. So, that should give some confidence.

On the other side, there is participation coming back into the markets which will also allow the formation of a base that will take a cue from the corporate numbers and take the next upmove. It is tough to say whether that will happen in a quarter or two quarters.

Source: Moneycontrol.com