News about new RBI governor has cheered negative outlook: Anish Damania, IDFC Securities

In a chat with ET Now, Anish Damania, Head–Institutional Equities, IDFC Securities, shares his views on the market sentiments:

ET Now: What do you make of Thursday’s monster rally: just a one day wonder or do you think we have a durable trading bottom in place?

Anish Damania: There was lot of pessimism in the market with respect to the current, with respect to interest rates and the economy. There were a lot of shorts in the system and banks had fallen off. So, the weights of bank has moved down from level of around odd 30 per cent to about 25.5 per cent which is a very sharp move down, almost to the lows which we have seen in last few quarters.

So, the banks are oversold and in cases like Axis Bank (because of this FII limit), we just had sellers on one side. However, FIIs could not buy because of this restriction on buying. Hence, Axis Bank got beaten up quite mercilessly over the last few days. Therefore, when a streak of positive news came through, it was without surprise that Bank Nifty had to spurt so much and it did. I am not surprised by this move, however, we need to understand that this is a correction of a very strong oversold position. We will go back to normalcy or back to fundamentals over the next few days once this chatter about good news flow dies down.

ET Now: As nothing has come in last 24 hours, economically speaking, then where is the good news?

Anish Damania: The news flow of the new RBI Governor making a few positive statements has cheered up the pessimistic outlook. Some of his steps like in FCNR, in terms of rupee trade etc. would mean that rupee could find some stability. To that extent, the optimism is coming up. The governor also said that he is there to balance growth with inflation etc. Therefore, people have appreciated his statements and to that extent because of this oversold nature in the markets, markets have bounced back. We will have to see how next few days pan out in terms of his actions as we go forward.