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Money flowing into Indian MFs; positive on mkt: HDFC Sec

Dipen Sheth, head of institutional research at HDFC Securities advises investors to buy MCX with a target price of Rs 1180 per share as the MCX business could see a big surprise.

Predicting the market movement in the short-term is always a challenge and dicey, says Dipen Sheth, head of institutional research at HDFC Securities. But on the brighter side, he says big money has started flowing into domestic mutual funds , which should mitigate if not manage a large exit, should it happen for a while with the FIIs. He is constructive on the market.

He says in the energy space,  Suzlon has systematically destroyed shareholder wealth. “There is a significant shift in promoter DNA for Suzlon,” he told CNBC-TV18. However, he adds that Dilip Shanghvi investing USD 300 million is a positive for the company and also the government focusing on wind energy will boost its performance.

He advises investors to buy  MCX with a target price of Rs 1180 per share as the MCX business could see a big surprise. He believes players in the defence sector such as  BEL and  Pipavav Defence could grow 5-6x in the next 2-3 years.

Below is the verbatim transcript of Dipen Sheth’s interview with CNBC-TV18’s Latha Venkatesh and Sonia Shenoy

Latha: What is the market looking like? There is a dash of pre-Budget rally still unfolding you think?

A: The disclaimer here is that short term is always very dicey to predict. The momentum is on our side, surely on the side of the bulls. Valuations are now looking a little, if not stretched at least adequate. There is hopefully a lot of new initiatives and actions to be taken in the Budget which should set direction for the next few months but there is a storm brewing in Europe, there is all kinds of funny macroeconomic developments and geo-political developments happening around the world. So, you might see a little bit of money being pulled out.

Foreign Institutional Investors (FIIs) own a huge chunk of Indian equities and every time they are net sellers for an extended period you could have a problem. The good news is that big money has started flowing into domestic mutual funds and that should mitigate if not manage a large exit, should it happen for a while with the FIIs. I am constructive. So there is also this side theory that the 3Q numbers have been uninspiring and there is an year-on-year (YoY) decline and at the aggregate level people put together performances of companies. It is not important where you are, it is very important where you are going especially when where you are going has been so brilliantly redefined. So, I am not too worried about the 3Q let off.

Stay tuned for more…

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