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Mkt to double in 4yrs, PSU divestments to be a hit: BofA-ML

The government is set to roll out divestments of state owned companies such as Coal India, ONGC and SAIL, as early as this Friday. With India having bottomed out and market reaching newer highs, Kaku Nakhate of Bank of America – Merrill Lynch feels it is the right time to undertake divestments.

In addition, she is confident of retail participation augmenting in divestments. Although retail interest may differ industry-wise on account of investors’ picks, she says in an interview to CNBC-TV18.

Continuing her bullish tone, she says that Indian equities will continue to outdo other emerging markets to such an extent that Indian market will double in four years.

Below is the edited transcript of the interview:

Q: Is it the right time to undertake divestment?

A: Markets are at a new high, it’s a right time to actually undertake divestments. The companies in public sector, at least the top eight or nine have done significantly better than the private sector. Costs have been under control so I don’t see any reason why people should not look at buying the stocks.

Q: Will LIC come to the rescue of divestment candidates this time too?

A: This is a new era and I think the test is whether retail will participate and there is an endeavour that retail will come in sizes so there is a new way of doing things and I am confident that people are bullish on India and people will come in the divestments. It may differ from company to company because people may not want to invest in every one of them. Depending on the industry and depending on their picks, I am sure flows will come in.

Q: So out of the big ones, you have got SAIL  happening on Friday, you have got Coal India , ONGC  as well. Which is the one that you like?

A: I really cannot comment because we are on one of them and that would not be prudent.

Q: What is the kind of feedback that has been received on road shows? For example, road shows of Coal India and ONGC pretty much happened together. So the feedback has been universally two different people are looking at stocks and I think everybody is working to see when it is going to launch and what is the timing because it is also about getting the timing right. Are you going to revise your targets for the equity markets since we are breaking records every other day?

A: We are very bullish on the equity markets. You must have seen our report and we continue to believe that India is in a very good position and the other emerging markets are not doing so well. Brazil has its own problems, Turkey is slowing down, Russia people cannot invest so net-net India continues to be one of the darlings and we will deliver quarter-on-quarter numbers because I think India has bottomed out and markets will double in four years.

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