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More consolidation for mkts; moderate Q4 for IT cos: ILFS

In an interview to CNBC-TV18, Kapoor said that some major steps taken by the government may help revive the economy but feels the rural consumption may still take some time to improve.

Vibhav Kapoor of IL&FS expects more consolidation in the market. According to him, the downside range for the Nifty is 8000-8300, while the index may hit 9,000 on the upside.

In an interview to CNBC-TV18, Kapoor said that some major steps taken by the government may help revive the economy but feels the rural consumption may still take some time to improve.

He expects the US Fed to delay the hike in interest rates as employment numbers remain weak and sees more retail investors entering the domestic market through IPOs.

Kapoor sees earnings improving by the second half of the quarter if the monsoon is good. He, however, expects IT companies to post moderate Q4 earnings.

Below is the transcript of Vibhav Kapoor’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Latha: We are finding good support at 8,300. We are not quite having the spunk to beat 9,000. Is this going to be the lot for a quarter or two now?

A: Our estimate was, last time we talked; the market should be consolidating and should be in a range between 8,000-8,300 on the downside and about 9,000 on the upside. The market has been in that range and from the lower levels we have seen a sharp recovery over the last seven-eight trading days. We have had continuous rise in the margin. There are two or three reasons one can ascribe to this. One, the domestic factors, I think there is some sense now that the government is doing lot of things which are going to have positive impact particularly on the infrastructure side over the next six-nine months. So you had the coal auctions completed, telecom auction completed successfully then the gas pooling which was announced few days ago, the road sector orders are beginning to go out and because of gas pooling the non-performing asset (NPAs) in the public sector undertaking (PSU) banks also will be helped. So there is a feeling that over the next six-nine months you would see things beginning on the ground. 

The other factor is completely global and I would like to point out that it is not only India which has been going up. If you look at the market everywhere over the last few weeks most of the markets have gone into new highs almost entire Europe, Japan, we have seen China going up and up everyday, Hang Seng went up 8 percent in two days, of course it’s the liquidity which is pushing it up but after the poor employment numbers in the US there is a feeling that interest rates are not going to rise so fast in the US and that is again pushing money back into the emerging markets. 

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