Market may rally 3-5% after weeks of bearishness, says Udayan Mukherjee

With regards to the auto sector, Mukherjee said, “I don’t think there is any great medium-term relief, which is coming for the sector. I also don’t agree with this constant harking for goods and services tax (GST) cut for particular sectors because that is not going to resolve too much of a problem that we are facing. It is one thing for the government to be proactive, it is quite another thing to start showing the kind of panic. Once you tell the market through your communication that you are paying attention to what the market is doing, that is sort of digging your own grave because then the market will keep on pressurising you. This is generally not a very mature path to walk down on. I am surprised the finance minister (FM) is doing it. The government is doing something but we should also realise that there is a fine line between showing intent and panic.”

Speaking about affordable housing space, Mukherjee said, “I think the next stop from the government will be that because they have tried a few things. Public sector undertaking (PSU) bank merger announcement was a terrible one and a very ill-conceived one and the government was trying to pass that off as structural reform, I don’t think the market should buy it and it has not bought it. Finally we will have to come down to housing in some form because that is at least one Band-Aid, which has some effect and it will help a few sectors, a few stocks and generally it might help sentiment a little bit because it affects more than one sector. The government will walk down that path very soon, who knows maybe it is this Friday or the next one.”

“I still don’t see so much attention on what the government needs to do now is to not think about somehow getting a few good monthly numbers for three months in the festive season and hope that will create enormous positive momentum because all that is lacking is sentiment and everything else is in place. That is one fundamental disagreement one should have with the government because it is probably thinking that way. There are too many voices, which are saying this will pass, it is just a few months and somehow if we can ramp it up a little bit through October-November then everything will be fine once again. I think if that is the thinking then the government is in for a bit of a rude surprise.  What it should be doing is to rather focus on the low-hanging fruit,” he said.