Rupee depreciation an incentive to withdraw money; overlook negatives in autos: Manish Sonthalia

The rupee declined to 76.23, by 14 paise against the US dollar in the opening trade Friday reversing the recovery it made Thursday, as persistent foreign fund outflows and muted domestic equities weighed on the greenback. FIIs were the net sellers in the market Thursday, offloading about Rs 1,468 crores, per exchange data.

On Thursday, the greenback had clocked its first gain in seven sessions. It has rebounded 23 paise to close at 76.09. If the currency, however, depreciates further, there will be more incentive to withdraw the money, Manish Sonthalia of Motilal Oswal Asset Mgmt said. In an interview with CNBC-TV18, he said: “Markets are a buy on dips. How much the dip is going to be is a big call that one needs to take in the short term. The dip is a function of the rupee primarily and the rupee looks quite vulnerable at this point in time. We have seen FIIs pull out money big time and obviously if the rupee depreciates further, there will be more incentive to pull out money.”

Autos: The market might want to overlook negatives in the auto space. “Its demand outlook is strong and valuations are attractive for auto companies,” he said.