The Hindu Business Line : `India still attractive in the long-term'

For long-term investors it is a buying chance. But beyond 10,000 it is not a cheap market and needs skills to look for value. -- ENAM CONSULTANTS' MR VALLABH BHANSALI

Mr Vallabh Bhansali of ENAM Consultants believes that beyond 9000-10,000 level, the market is not cheap. He further says that there exists buying opportunity in the market for the long-term. Mutual funds are sitting on huge money and they will look at investing. Mr Bhansali says that India continues to be attractive in the long term. Right now he is cautiously optimistic on the markets.

Excerpts from a CNBC-TV18 exclusive interview:

Is this an opportunity to get back into the market for people who have missed out on the rally?

If one is a long-term investor then it is a buying opportunity. Although market beyond 9000-10,000 is not cheap and therefore one must possess skills to look for value .

How much will international factors like US interest rates and a weaker dollar influence this market?

I think the world is quite an integrated place and India is more so, than many other countries. But to say that global factors won't affect India is not correct, to what degree they will get affected depends on what kind of development happens.

For example, oil prices going up, interest rate going up, as well as some calamities in other markets. So it will be a combination of events that would decide the impact one way or the other.

Having said that, mutual funds have mobilised a lot of money in India and some of them are sitting on cash. I believe India's attractiveness for the long-term will continue although there could be shifts with the high interest rate, dollar interest rate that is prevailing right now. Therefore, these shifts will continue to disturb those who are not informed buyers. One needs to understand the difference between a reaction, a rally and a trend reversal and that is where an investor should be careful.

It is also a correction across all asset classes, precious metals, base metals included, is this what the market might have to live with?

I think the rally did not get built that way and it may not unravel or come apart in the same manner. These are coincidences.

I think asset classes are at some level connected but they are not connected all the way. India a few days ago was considered an asset class by itself and if India is an asset class then that class has not come apart for any reason and one should look at it in that manner.

But will you say that India as an asset class does look expensive even at 9,000-11,000 levels?

A lot of people said that Sensex at 11,000 looks attractive, but we are there so one cannot be too precise about these numbers.

Now the Sensex is trading at around 17 times next year's earnings by some estimates and given our outlook for the longer term it does look interesting.

If the markets went to 22-23 times, those numbers would look expensive and that is where most people were expecting a correction, which has happened.

What about foreign liquidity, is this a period of pain that the markets will have to go through?

A lot of these fund flows are unpredictable. Funds have been mobilised for investment in India in the real-estate sector and in the equity sectors. Till what point in time these funds will flow into India one cannot predict.

So the pain is endemic in this stock market process and there is not one particular pain that one is talking about. .

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