Views of Viswajit Srinivasan, Director - Business Development, Wholesale Lending, Capri Global Capital Ltd. in ET Online

May 15, 2014
Don't expect a 'spectacular rally' on Friday the 16th, say analysts

NEW DELHI: It may not be official yet, but it looks like the markets are discounting a scenario where the NDA forms a government with Narendra Modi as a Prime Minister on Friday, May 16. 

We have already witnessed a massive spectacular rally of over 1,500 points on the S&P BSE Sensex in a matter of just three trading sessions starting Friday. All the exit polls have unanimously given the BJP-led NDA a seat tally which is near majority of 272 seats, which will enable them to form government and Modi to become India's 14th PM. 

However, the real picture will be out on May 16 only. The rally is primarily driven on the hopes of exit polls and these polls have been misleading in the past two elections, say analysts.

Even if the NDA does come to power but with seats lower than market expectations, we may see some bit of profit booking, say experts. The runaway rally seen so far on the benchmark indices will only extend marginally even if a stable business-friendly government comes to power on May 16, because most of it is already factored in.

"Exit polls have not been completely reliable, as has been evidenced in the past. However, the overwhelming view is that there would be an NDA-led government at the Centre and this has already been factored in by the market at the current levels," said Viswajit Srinivasan, Director - Business Development, Wholesale Lending, Capri Global Capital Ltd.

"In the event of a significant difference between the exit poll results and an unstable government at the Centre, the market would see a big correction. The volatility would definitely be high and retail investors would be best placed to not enter till there is clarity on which party is likely to lead the next government formation," he added. 

The recent run-up seen in benchmark indices is evident from the fact that the markets are pricing in some probability of the BJP-led NDA government at the Centre. If the exit poll numbers are in favour of NDA, there is a possibility of a sharp up-move while a vice-versa situation could be disastrous for the markets, say analysts.

"It seems the NDA may form the next government at the Centre. The Nifty around 7100 levels suggests a lot of good news is already factored in. Having said that if there is a fractured mandate, with the NDA bagging around 220 seats, then the markets will be in shock," said Raamdeo Agrawal, joint managing director of Motilal Oswal.

"I think that NDA will get 225-230 seats as no one's prediction has been below that. So let's not talk about something which is completely surprising, like the UPA getting 250-270 seats," he added.

The last three days saw the Nifty rallying over 100 points and the index is now trading comfortable over 7000 levels. Experts feel that traders should book some bit of profits as the rally might not be that strong on Friday.

"I have been advising my clients now for the last 8 to 10 days, saying that at every rise it is time to book profits to a certain extent. Investors should look at liquidating 30% to 35% of their portfolio, especially if they have bought in the last five or six months," said Ambareesh Baliga, Managing Partner-Global Wealth Management, Edelweiss Financial Services.

"It is always prudent to book out to a certain extent, because the best of the news is already there in the price and assuming that they have a complete majority as per the exit polls, we can possibly have one more bump up may be of 150-200 points," he added.

But Baliga is of the view that the pop may not really be worth playing, because in case the final result is different and negative compared to the exit polls, the downside could be huge. So it is better to take that bird "It is always prudent to book out to a certain extent, because the best of the news is already there in the price and assuming that they have a complete majority as per the exit polls, we can possibly have one more bump up may be of 150-200 points," he added.

But Baliga is of the view that the pop may not really be worth playing, because in case the final result is different and negative compared to the exit polls, the downside could be huge. So it is better to take that bird which is in your hand than hoping for two in the bush, he said. 

Capri Global Capital in talks to mandate financial advisors for acquisition, exec says

covered in mergermarket.com on 13th May, 2014.

Capri Global Capital to raise INR 10 bn to grow loan book, ED says

Covered in Mergermarket.com on May 15, 2014

Capri Global Capital net profit rises 25.18% in the March 2014 quarter - Capital Markets

Capital Market,May 10, 2014 Last Updated at 16:19 IST

Sales rise 20.71% to Rs 39.40 crore

Net profit of Capri Global Capital rose 25.18% to Rs 26.20 crore in the quarter ended March 2014 as against Rs 20.93 crore during the previous quarter ended March 2013. Sales rose 20.71% to Rs 39.40 crore in the quarter ended March 2014 as against Rs 32.64 crore during the previous quarter ended March 2013.

For the full year,net profit rose 10.08% to Rs 81.76 crore in the year ended March 2014 as against Rs 74.27 crore during the previous year ended March 2013. Sales rose 20.61% to Rs 148.58 crore in the year ended March 2014 as against Rs 123.19 crore during the previous year ended March 2013.

Lok Sabha poll outcome: May 13 will be a bigger event than May 16, say analysts

By Kshitij Anand, ECONOMICTIMES.COM | 6 May, 2014, 01.29PM IST 

NEW DELHI: Although May 16, when election results are expected to come out, is supposed to be a very big and important day for the markets, but analysts feel that the big move in the markets may come in from May 13th onwards when the outcome of the exit polls starts trickling in.

"We have moved higher in the past couple of months with benchmark indices gaining over 6 per cent since March 2014. The basis of this euphoria on the street is the result of opinion polls, predicting a BJP-led government. But will the BJP have a clear and absolute majority remains to be seen," say experts. 

The exit poll data could be used as a proxy or foreshadowing of the actual results on May 16th and investors or traders might start taking action early.

"Whatever is the result of the exit polls, it will start impacting the markets from May 13 onwards. It is also possible that there is some privately carried out exit poll information for their private consumption available to some sophisticated investors," said Dr. Vikas V Gupta (Head- Research & Product Development) at ArthVeda. 

The recent run-up seen in benchmark indices confirms the fact that the markets are pricing in some probability of the BJP-led NDA government at the Centre. If the exit poll numbers are in favour of NDA, there is a possibility of a sharp up-move while a vice-versa situation could be disastrous for the markets, say analysts.

"I agree that 13th May would be a precursor to 16th May Lok Sabha elections results. If the exit poll numbers are in favour of NDA and Narendra Modi, the market will zoom and touch a all-time high on 13th itself," said Rajesh Sharma, Director, Capri Global Capital Limited.

"However, if the numbers reveal the probability of the hung Parliament, then the market will certainly tank by more than 500 points in a day, as the market had been moving up in anticipation of NDA coming to power at the Centre," he added. 

The euphoria ahead of elections results due in mid-May cannot be ruled out in the markets. The Indian markets have got support from strong inflows from foreign institutional investors (FIIs) who are almost certain of a Narendra Modi-led NDA government after the general elections.

Amid hopes of a stable and reform-oriented government after the general elections, foreign investors pumped in Rs 9,600 crore in Indian stocks in April, the eighth consecutive month of inflows, as per latest data. 

Analysts feel the time period between 13th and15th May will be very crucial for the markets and wild swings can be expected on either side. The strong expectations of the BJP-led government and extensive media coverage over exit polls would keep the sentiments positive. However, investors would prefer to hold a certain portion of their liquidity to cover unexpected results.

"Exit poll throws the ball park figure of the next government which the markets would react to immediately. Between 13 and 15th May 2014, the markets would be volatile and react to exit poll results and show a direction going forward," said Siddharth Sedani, Vice President (PMS) at Microsec Capital Ltd. 

Views of Mr. Sunil Kapoor, Executive Director, Capri Global Capital Limited on RBI’s Monetary Policy

“In today’s RBI Monetary Policy no major policy changes have happened. Considering that Inflation specifically CPI has eased during last 2 months and the Current Account deficit has also shown significant improvement it was expected that RBI will not make any significant change in the policy rates specifically on the upward direction.

Going forward key monitoring factors will be, formation of new government, impact of el Niño on monsoon performance and the current account deficit. However the positive macro signals along with expected improvement in GDP growth due to clearance of significant infrastructure projects will help a lot. I expect that another few months of improvement in inflation, better GDP growth and stable monsoon will give RBI room to reduce the Policy rates and basis the current trends I don’t expect any further increase in policy rates in the next monetary policy.”

It's three to tango! Stocks that can return more than 60% in a year

Market outlook is uncertain, thanks to the coming general elections. How the markets will behave in the run-up, experts are starkly divided; with some betting on a surge and others predicting otherwise.

Here are three stocks that brokers say can return more than 60% in the next nine to 12 months:

DLF

Religare maintains 'buy' rating on the stock after the company achieved the debt target, which is a key positive.

The risk-reward ratio also remains favourable given the improved balance sheet and rental assets.

Adani Enterprises

The stock after giving a breakout in December completed a pullback in January and February and is on the verge of resuming its uptrend. Mitesh Thacker advises investors to accumulate the stock with a stop loss of Rs 220 and look for a target of Rs 400-420.

Delta Corporation

This stock has also has given a pullback to its breakout levels of around Rs 95 with last week's low at about Rs 97. Investors can look at accumulating the stock around Rs 100-102 mark.

The stock remains in a long term uptrend and Mitesh Thacker is of the view that the stock can test levels of Rs 170 to 180 in the next six to nine months. I would suggest accumulating with a stop below Rs 78.

Here's what experts say about how markets tune to the elections:

Rakesh Tarway, VP and Head of Equity Strategy, Equity and Derivative Products, Motilal Oswal Securities

"A hung Parliament would be a bad option for India as a country and market will not like Third Front as it brings political instability."

"Third front will not be a better option for political scenario. But too many aspirants for PM, will limit its success post poll."

Rajesh Sharma, Founder & Director, Capri Global Capital Ltd.

"Any further prolonging of this situation (on economic front) will certainly widen the gap between developed economies and Indian economy which is aspiring to become one of the largest economies of the world."

"Towards achieving this goal our IIP should grow in double digit and GDP growth should be at least around 8.5 per cent. This will not be possible with political situation of hung Parliament."

Siddharth Sedani, Vice President-PMS at Microsec Capital Ltd

"Although, we see few green shoots in the economy in last couple of months. Investor should utilize the opportunity to accumulate quality companies on dips ahead of elections due to volatility."

"Automobile, Export oriented companies and Infrastructure can be growth drivers in quarters to come."

Dolat Capital

"The elections will at least bring back some level of confidence back for key stakeholders, and then it is up to the actions of the new government; how much and how quickly we recover to the trend line growth."

Vikas Khemani, CEO, Edelweiss

"Most of the activity seems to be building around the belief in the political outcome. Some of the surveys have come out and incrementally there is a belief of a strong political sort of outcome that is getting built into the market albeit in a slow and steady manner."

Ambareesh Baliga, Managing Partner-Global Wealth Management, Edelweiss Financial Services

"We have been bullish on the market for a while, and talking about the pre-election rally."

"The pre-election rally that we all are waiting for should take us to new highs. I will not be surprised if we see levels of closer to about 6,500-plus in the next one and a half, or two months."

Source: http://articles.economictimes.indiatimes.com/2014-02-27/news/47740048_1_motilal-oswal-securities-rs-170-delta-corporation