It is too early to get excited about this market, says Vikas Khemani

Vikas Khemani, the founder of Carnelian Capital Advisors, shared his views and outlook on the market.

“There has been a change of mood post the Pulwama response. Markets are now feeling a lot more confident about the continuity of the government. That is the only reason this change of sentiment has happened. Anyway markets were very oversold in the zone where risk reward was falling into place. I think this is good. Internationally also we are getting good newsflow in terms of Fed’s response how it is going to be to deal with the overall situation. All those worries are settling down and once we have more clarity around the big election outcome which market will keep on building hypothesis from now till election, I think first round of pullback has happened and maybe markets will consolidate but overall I feel that markets are now in a reasonably good situation,” Khemani told CNBC-TV18 on Friday.

“I believe the economy is on the right track. Once this big event is behind us –this is a very binary event according to me from market sentiment perspective in a shorter-term. So currently the reason why markets have responded so well because of the significance of the event and the markets are getting comfortable around that. I am not very negative in the markets but at the same time, I don’t want to get excited, it is too early,” he added.

“Economy is starved of credit flows and liquidity so I don’t think we will see a V-shaped kind of recovery. It will take time for it to recover slowly and we need to see lots of liquidity credit flow in the system. We are not anywhere close to what we need to be to get decent kind of growth back both earnings as well as economic growth,” said Khemani.

In the auto sector, he said, “Currently we like Bajaj Auto and Ashok Leyland.”