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Pashupati Advani of Advani OTC Dealers said there are both bullish and bearish investors in the markets, as seen by low volumes. He told CNBC-TV18 that the US Fed move, gains in China and other markets are adding to the momentum. He expects to see an upside of around 5-10% from current levels.

Advani is bullish from the medium-term and sees more upside than downside. According to him, the interest rate sensitives will not fare very well and overall results are good.

Advani is concerned about the measures taken to curb high commodity prices. He further observed that markets will continue to see flows as long as the primary market does not absorb it. He hopes to see the Sensex go up to 19,000 before it goes back to 16,000.

In the technology sector, there is buying due to rupee rise and we are seeing consolidation in the midcap space, he stated.

Excerpts from CNBC-TV18’s exclusive interview with Pashupati Advani:

Q: You have been all over the world. What is the sense that you get from people?

A: The best part of doing business in this scenario is that they have got two types- one type is bearish and another is bullish. It actually explains why you get lower volumes than you have seen in a while because the people who are bearish are not actually throwing out the stuff yet and the people who are bullish are not jumping in. But they are all nibbling and selling a little bit which is explaining the volumes. There is a lot of confusion. But the fact that the Fed seems to have paused is putting some kind of relief into everyone’s heads and also the fact that the Chinese market was down quite a lot and started to move up is making the whole of Asia move up and we are going with it.

Q: Is there a lot of upside from here? Are we closer to the top end of the trading range?

A: Our markets will stop based on some kind of an event we haven’t yet seen it. As long as the rest of Asia is moving we are moving with it. What is going to cause the break on this whole operation is if something happens and there is a sort of explosion either in the US or Europe. It’s been 9-10 weeks since Bear Stearns has gone under or sort of supposedly changed hands. People have sort of stabilised and realised that money is coming back into the system. Therefore, people are beginning to put trades on again. That’s what is making this market go up as well.

Q: In which camp are you in- relief rally, just a pullback or do you think we resumed the uptrend?

A: I am sort of bullish in the intermediate term. Till we get another explosion, we should be long the market. Of course, when the explosion comes we are going give some of it back. But we are definitely on a roll and should continue to be that way.

Q: How high are the odds that we go back and retest the lows of January of about 15,000 odd?

A: I hope not, but obviously if there is any kind of connection, it will be probably 10% as we have seen before. But we probably have got more upside than downside from this level.

Q: Is that the case even globally?

A: Yes. The Dow also as a result of the Fed was up a lot and we will continue to move.

Q: What about earnings? What did you make of it this time around so far?

A: People are trying. Obviously, the companies that are interest rate sensitive are going to have slightly lower earnings. But HDFC surprised us all. As far as yearly earnings are concerned, we saw tax payments in March. Everybody seems to have paid a lot of tax. So, the earnings are not going to start showing any kind of a dip until the end of the first quarter. They are definitely here to stay at the moment.

Q: Do you have any thoughts on technology?

A: What actually happened in Aztecsoft is actually something that I had been talking about for a long time, which is consolidation in the midcap IT space. A company like Aztecsoft didn’t have much choice and needs to get a bigger infrastructure in bigger front-end marketing and MindTree seems to provide that. I would see a lot of companies going this way in the next few months. Actually, that’s a good trend. But those companies will then start getting more and big contracts. They are probably going to be very interesting to watch going forward.

Q: What else have you been buying generally in the market?

A: We have been in the power sector. But that’s leaped and again banking, back into ICICI Bank and HDFC Bank. The fact that rates have not gone crazy have basically helped them and they have got big bases. Obviously, Kamath’s ascension to CII President is obviously going to put him more in policy and that’s going to make a difference to the whole sector. He is pretty bullish as he has been saying on TV over the last few days and those are the sectors of growth. Those are the engines of growth and that those are the ones that we need to be on because India is still growing despite 7.5% inflation. We are still growing and are still a lot better off than most of the other countries.

Q: What about real estate which got hammered completely in the fall and has had a nice little bounce back? Would you buy there now - DLF and Unitech of the world?

A: There are transactions that are going to happen. It just means that instead of making 50% profit, they will make 20% profit. But they are still going to make profit and most of the big ones are still moving along albeit at lower levels. So, there is a demand in India that has been created and real estate will continue to do well.

We have to sort of wait and watch and see which ones to go into. But the topline like DLF and Unitech will always be interesting to be in.

Q: Which is your favourite rate sensitive sector between PSU banks, autos and real estate?

A: PSU banks as a whole has been ignored in this rally. So, even the PSU non-banks are good. But PSU banks are probably where there is going to be some kind of a good movement.

Q: What did you make of the monetary policy? Are you sanguine that rates are not going to harden from here any more after hearing the RBI Governor?

A: I think he definitely wants to control, but the control is going to be in commodity prices and it is going to be a forced control. I think that has a worse effect for the stock market when you kind of have artificial things put on. There is pressure in the iron ore sector and the steel sector which will probably eventually spread to sugar. So, the bigger danger that you have is the monopolistic forces putting price curbs and export curbs on certain items.

Q: When will flows resume? We have lost about USD 3 billion odd this year in FII flows. In your interactions overseas, when do you sense we can get some support from flows again?

A: Flows are there but the flows are coming from the traditional funds. We are going to a billion dollars a month coming in. As long as the IPOs don’t sort of use that money, we will be fine and this quarter we are not seeing a huge calendar in front of us. By the end of this quarter, it is probably as a result of the flows that we have seen; the markets were up in the month of April.

Q: What is the sentiment like? Do you think there has been some amount of a pullback in sentiment or is it still quite as bad as it was in the month of March?

A: In April, we have seen the results. It is obvious that people are beginning to dip into the market and beginning to put their money to work again. There is a lot of money that is long-term money that cannot afford to sit on the sides and is coming. We are still a growth story and I feel that we are going to see money. We are seeing money both in FDI as well as in portfolio investment and we will continue to see it.

Q: Is 19,000 for us or 16,000 first?

A: That’s a tough one. I hope 19,000.

Q: What do you think?

A: I think 19,000. If you had said 18,000 or 16,000, I would say 18,000.

Source: Moneycontrol.com