Indian Financial Markets: Karvy bets on pvt banks, FMCG, pharma; calls for reforms

Wednesday, August 8, 2012

Karvy bets on pvt banks, FMCG, pharma; calls for reforms

Tue, Aug 07, 2012 at 12:58

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Karvy bets on pvt banks, FMCG, pharma; calls for reformsVarun Goel of Karvy Private Wealth feels the market strength witnessed in the last couple of weeks has been essentially triggered by global cues. . Share . Email . Print . A+A-

Varun Goel of Karvy Private Wealth feels the market strength witnessed in the last couple of weeks has been essentially triggered by global cues. With the European central bank expected to take further action and the encouraging macro economic data from the US has provided the much needed support to the market, added Goel.

However, the Indian rally will be hard to sustain in the absence of policy actions in the short term, cautioned Goel adding, "The global sentiment has been extremely positive but for the rally to sustain, we urgently require action as far as the fiscal side of the economy is concerned."

Looking at the robust performance of the private sector banks, Goel remains positive about this space. But, he is slightly apprehensive about the public sector banks and feels the asset quality could be a problem in the coming quarters. Hence, Goel maintains a cautious approach about the PSU banking space.

Here is the edited transcript of the interview on CNBC-TV18.

Q: What are you making of the market and the strength we are seeing, in fact we are outperforming lot of our Asian peers, what do you think has led to this outperformance?

A: In the last couple of weeks the market strength has been essentially led by global cues. We have seen some extremely supportive statements as far as monetary policy is concerned in Europe. The markets of course continue to expect further action from the ECB in the times to come. Of course the macro economic data in US has also been very supportive.

I think the Indian rally will find it very hard to sustain, if there are no policy actions taken in the short-term. We had very positive statements from the Finance Minister yesterday. I think there are a lot of expectations the retrograde steps which were carried out in this years budget would be reversed.

The markets are definitely looking for some signs on GAAR. I think markets are also closely looking at the retrospective taxation amendments which were carried out. I think Diesel price hike looks extremely unlikely in the short to medium-term. However, if the FM is able to present some kind of credible road map towards fiscal consolidation, that will give RBI the necessary equation to go out and carry out the necessary rate cuts in the next six months of this fiscal.

Overall, the global sentiment has been extremely positive but for the rally to sustain, we urgently require action as far as the fiscal side of the economy is concerned.