Andrew Holland of Ambit Investment Advisors has been gloomy on China for some time now. He says global markets have been in a bear phase but most investors ignored the signs. However, it is not reminiscent of 2008 as it is not the banking system, but just the China market that is seeing the slowdown, he told CNBC-TV18.
As far as India is concerned, Holland maintains that Nifty will be at 10,000 by December-end. According to him, lower commodity prices, coupled with interest rate cuts that are likely to happen in the future will bode well for the markets. Betting on interest rate cuts, he says the banking sector is a favourite. Within the space, he prefers private sector banks over public sector ones.
Below is the transcript of Andrew Holland’s interview with Sonia Shenoy and Anuj Singhal on CNBC-TV18.
Sonia: It has been so very volatile; it has just been one up day, one down day and yesterday of course was the biggest down day in a long time. How are you wading through all of this?
A: Fortunately as we know, we have been gloomy on China for some time. Actually the market is not so complacent about the slowdown that has been happening there, so it gets played out very rapidly these days, so our target for the index is around 8000 and obviously we overshot that which we always do. So, we have been using that today to start buying, this is a good time I think.
Anuj: So what sectors, do you think it is again back to banking or would you rather seek the comfort of the likes of IT and pharmaceuticals?
A: IT and pharmaceuticals are places to hide but as per my view on IT, I am still negative on an overall growth basis. So, if I fast forward, I think that the interest rates are going to fall in India, that is for sure and so the banking sector remains our favourite to be the ones buying and obviously the private banks is where I am going to park the money rather than PSU banks at the moment.
Sonia: Yesterday in the heat of the moment when the markets had fallen quite a bit, there was so much talk about all this being reminiscent of 2008, a big bear market coming but today things have stabilised so it doesn’t seem like that could pan out but what is the sense you are getting, do you think that global equities as a whole could be headed towards bear phase?
A: Markets have been in the bear phase and it has just been unnoticed or ignored by everybody. It is not 2008, that is for sure because it is not the banking system, it is just China slowing down, so what I think will happen once the dust settles, it is going to be certain sectors which are going to be affected by this, obviously metals and commodities are one of them but obviously other sectors like oil or luxury goods towards China, so Jaguar will be one of them, will continue to have a hard time but once we get through this, we will start to see that fast forwarding a little bit but this lower commodity price is only great for Indian company margins and we are not factoring in that at the moment. So this is a good time to be looking at those companies and we will see better margins going forward.