Expect a choppy market for a few more months: BP Singh, Pramerica Mutual Fund

In a chat with ET Now, BP Singh, Executive Director & CIO-Equities of Pramerica Mutual Fund shares his thoughts on the market. Excerpts:

ET Now: Nifty is sitting at a record high, and yet the market breadth is choppy. What do you think?

BP Singh: This happens when we are staring at three big events - beside the rollover, the FOMC meeting tomorrow and the next monetary policy. There is a huge amount of churning which will be seen in the market in these periods, because many people who do not believe in the fundamentals, see the momentum and join the market and expect that momentum to carry on for a longer period.

For example, we are in the results season and the results are being reported. There are good results and there are bad results. Everybody expects all the corporates to give good results because the market has performed, but that is not going to take place because the cash-rich companies continue to report good results and the cash-starved companies continue to report bad results.

The time has come to start picking up the right stocks, back them and participate in the bull market. We will continue to see that churning for a few months from here onwards and that is where you will find a huge amount of difference of opinion between the people. That is where the stock pickers will continue to pick good stocks and ride the market.


ET Now: What is the sense that you are getting about what could underperform from here? We have seen a high beta play one up day, one down day with the kind of volatility we have seen in the market, but now that earnings are trickling in, what could significantly underperform?

BP Singh: Reacting to the earnings, stocks will underperform for some time for a few days. We think that companies are heavily leveraged and they are practically in all the sectors, so it is very difficult to pinpoint a particular sector. Examples would be the industrials and the capital goods - these have some companies that are heavily leveraged and have also performed in recent days.

Those companies are going to underperform. But as a sector, it is the commodities which are going to underperform in the near future. The kind of scenario which is emerging globally, I do not see a situation where the commodity prices will continue to deliver. Therefore, those stocks are going to remain a serious underperformer in the coming months.