More downside risk exists: Anish Damania, Emkay Global FinServ

Anish Damania, Head-Institutional Equity, Emkay Global Financial Services Ltd., in a chat with ET NOW talks about the market outlook. Indian markets for the year 2011 were down by about 25% in absolute terms, 42% in dollar terms. Is it too optimistic still to make an assumption that in 2012 Indian markets will bounce back by 15%?

Yeah, it looks like that so far. I cannot possibly time the event but what we feel is that more downside risk exists, so till the time they play themselves out, it is very difficult to say ‘okay, the recovery will happen from the second half or first half of FY14’, so if that is the case, you will see bottoming out somewhere in this year itself but whether it will bounce back from here is a very difficult guess to make at this point of time. We are yet to see a situation where companies become very cheap to start buying.

Looking at only the book values, one can say that ‘okay, now is the time to look at these stocks irrespective of what’s happening on their earnings at this point of time’, so we have not yet reached that level. Somewhere closer to 4200 is where we could reach those levels on stocks and that’s the time, then probably you could start making some blind bets into the market irrespective of where we are in terms of the whole recovery cycle.