Expect currency to stablise at current levels: Prateek Agarwal

In a chat with ET Now, Prateek Agarwal, CIO, ASK Investment Manager, shares his views on market outlook.

ET Now: SGX is up by 2%. It is up 100 points plus. Do you think somewhere there is a case of misplaced optimism because even though the governor was very impressive in his first press conference late last evening, he does not have a magic wand, he will not be able to turn around things dramatically overnight?

Prateek Agarwal: Fair enough but the sense is that the measures that have been announced take care of one or two worries that the market had. One was that capital account would get restricted going forward.

The measures that have been taken without saying so, kind of say that it stays open, we want to deepen widen the capital account. So, that is a very strong positive message which has gone in. Second, the measures should result into higher dollar inflows in terms of deposits with banks.

RBI would probably increase reserves a bit and hence stability of the currency may be achieved. So ,this was something which was unexpected and is positive in terms of currency outlook plus any which ways, the next trade data should show significant improvements.

So combined both and chances of currency stabilising at current levels or better would be higher. So markets, typically after the sharp sell off, would tend to bounce back once currency stabilises.

ET Now: So yesterday’s press conference will not fix the GDP growth and it will not take care of the tapering problem. So what is the excitement all about?

Prateek Agarwal: One, there is a particular position the market takes in terms of things getting worst. The excitement is that maybe you have a guy at the helm who understands things better, whose body language says, trust me I know things and you at least for sometime would tend to believe that things would not get worst.

So, there is a correction to that but yes, I agree the next quarter numbers would not be good, the quarter after would not be good, growth will slip and hence one needs to be extremely selective in what one is buying.