Market will be rangebound over the next three months: Jitendra Sriram

Jitendra Sriram, VP & Fund Manager-Equities, HSBC in an interview with ET Now talks about his outlook for the markets.

What's your own assessment of the roadmap that we can take for ourselves going forward maybe into the next three months or so?

Over the next three months, we are going to be pretty much in a range bound market. The problems that you have highlighted just now whether it is emerging from the periphery of Europe or whether it is local issues like inflation, etc., at least coming onto the local issues, I clearly see that inflation will probably start inching southwards only post September when the base effect starts catching up with us, so at least for the next couple of months, I would suspect that inflation will remain at elevated level and the fact is monetary policy does act with a lag, so even though the RBI might have taken its necessary steps of a 50 basis point hike.

You should wait at least about 4-6 weeks before you can start seeing the implications of that, that is point No.
1. Second is I guess the way forward for even the RBI would be to say 'look at how the monsoon pans out, what could be the impact in terms of crop output and as a result, food-related inflation' and probably decide what to do next maybe around July or so, so for the next couple of months, we should be in a fairly range-bound market. Clearly valuations today are much more reasonable.

A lot of the froth that was in the marketplace and clearly in the last rally from 52 to 58 odd, market completely ignored the buoyancy in crude. It is paying the price for that at this point of time. Crude is a big headwind for India and no matter what anybody tells you the fact is rising crude is not good news for Indian consumers and that is clearly what the market has done right now.

These events will continue to prey on the mindset, the fact is now if you have seen a spate of negative news coming from Europe whether it is a Moody’s downgrade of Greece or whether it is S&P throwing in a potential downgrade in some of the other nations and so on and that's causing a little bit of a risk aversion trade as well. Going onto the rupee as well, you have the issue of 45 quarter on the rupee, which is it has again shown up almost a rupee of strength, so clearly yes, in a range bound market.