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Rally will continue: Dayal

This article was posted on Sep 23, 2009 and is filed under Market Outlook

MUMBAI: Ajit Dayal, managing director, Quantum, said the Sensex will surge to 21,000-level on foreign funds coming to India.

What’s your reading – has the market run out of steam?

Dayal: No. We have not seen any evidence of that. We think earnings for the year ending March 2010 will be revised upwards by analysts very quickly, and so will the earnings for March 2011 by 20-25%. The next break, probably over the next few months, will be from foreign money coming into India…there will be a massive surge in the Sensex heading toward 21,000 as estimated by June-July 2010…now, you got to have a pause…many stocks are up 100-150% from where they were at the start of the year, undeservingly, in my opinion…

What do you make of the noise around Bharti? What is your reading of the situation?

Dayal: Bharti, as a stock, I was a little disappointed when they started the MTN transaction. I would have preferred Bharti to be an India-centric play on mobile telephony.

Having said that, they are keen on doing the transaction with MTN to be a global player and to get footprint in Africa. There will be many issues dealing with multinational culture outside the home continent. Every time an Indian company has tried to venture outside India, and it began in 1970 when they went to South East Asian nations, they blew up everything. Goenkas, Birlas and Tatas…they all went to South East Asian countries. The same thing happened with the euphoria in India over 2005-2007 with the acquisition by Indian companies of German, US and UK companies…and we are seeing the damage of that….

I am not so sure whether Indian managements are equipped or ready to make a success of it. I am sure there are a few successes but I know of more failures….

What are you making of the plethora of treasury sales taking place in the market?

Dayal: Clearly, the markets are in a buoyant mood since the last five-six months…investors are happy to take risks, and companies are willing to provide them with the risk…companies are doing in this environment what they should be doing naturally, which is satisfying the appetite for risk by issuing shares….

I think investors really need to be careful when they buy shares. Although I am optimistic about the market and expect the Sensex to reach 21,000 by June-July 2010, we are more cautious about the prices shares are being sold…investors need to understand that when they are buying shares that companies are issuing, they hire bankers to get the maximum price and not the minimum price. Don’t blame the companies for anything wrong… blame your greed for that…if you find them risky, please stay away….

source: UTVI

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