Market seeing patience, if not conviction: Prakash Diwan

In a chat with ET Now, Prakash Diwan, Director, Altamount Capital Management, shares his view on select sectors and stocks.

ET Now: Gains seen in the last four sessions have proved many investors (who believe the market has no conviction) wrong. It has gone up one way and that is up. Different sectors are participating with oil and gas taking the lead last week and now banks on a roll. How much more upside can we see?

Prakash Diwan: I wish I knew.

ET Now: Are not you convinced? That is why I said it most people are not convinced.

Prakash Diwan: So it is….

ET Now: May be it is also inevitable, given the kind of correction we have seen.

Prakash Diwan: It has been very hesitant; it is not something where you see it kind of come out of the woods and start looking strong.
It is more of technical reason like short coverings. These reasons have finally triggered this rally. So, there is nothing much that changes the way fundamentally. As we are getting close to earning season, we should probably start factoring in how ugly or beautiful June quarter numbers would .

A lot of companies would not be able to justify the prices they are trading at. Thus, the June quarter numbers could be a mixed bag. My sense is the market is not seeing too much of fresh inflows except from the dDomestic institutional investor (DII) side.

ET Now: DII money coming in is not bad though.

Prakash Diwan: Yes. DII inflows are good.

ET Now: Infact the inflows by domestic institutional are keeping the market afloat amid FIIs selling.

Prakash Diwan: Till the US Fed rate hike is very clearly visible, I do not think that is going to be really such a big impact markets. The US Fed rate hike is significant in terms of its potential impact and there will be a lot of reactions before the rate hikes actually start. A lot of knee-jerk reactions are likely.

Other than that, it is a bottom up market. You could look at value picks, even buying into those, but you cannot go out and buy everything in a sector as yet.

Those days are over. Today, you have a Unitech and an Indiabulls Real Estate doing well. But that does not mean that the entire real estate pack is going to take off.

You have some news flows to back these things. Similarly Infosys has performed on Monday, but the rest of the IT companies are not doing well.

ET Now: It is all about banks that leading the charge are now. What is your view on the space?

Prakash Diwan: There have been days when banks were hammered badly.My sense there is more patience that is coming in into the market now, if not conviction. People are buying with a very clear six-12 months. They are not keeping a time horizon of say six weeks in mind. That could possibly be the reason why banks have started looking up. If you would have to buy banks before transmission of interest rates starts having the positive impact and the recovery in the capex cycle