With investors having being foxed by the volatile markets, Saurav Arora, senior vice-president, Jaypee Capital tells Puneet Wadhwa to follow the wait-and-watch policy. Edited excerpts:
The markets have been paying more attention to the global factors rather than positives on the domestic front. Do you expect this to continue, or is the worst over?
The news regarding the euro zone is getting worse, with the latest being problems in few banks in Spain. The other news flow that affected markets was increasing problems in the Korean peninsula. The China factor is also coming to play on decreased exports to Europe due to currency movements. We expect some more downside before a sense of stability sets in, as investors may sell in panic.
What are you advising your clients now?
At this point, we are advising clients to sit out and wait for more clarity to emerge on the euro zone before taking a call.
Realty and metal scrips have borne the brunt of the selling spree in the past few days. What is the outlook for these two sectors?
The commodity space is most affected due to negative news flow coming out from the euro zone. A fall in prices due to reduced demand from China has affected metal stocks the most. We believe that there will be some more downside for metals until there is stability on the global front. Real estate sector is in a difficult stage due to large supply and low demand. It is also a high beta sector and could see some more downside.
Any particular sector/company you are optimistic about for the medium to long term?
We are positive on sectors that have domestic focus. We like banking, capital goods and infrastructure.
