Tips for Trade: GAAR to hit market sentiment; pick largecaps, FMCG
On our show Tips for Tomorrow, Vivek Mahajan, Head- Research, Aditya Birla Money and Sudip Bandyopadhyay, MD & CEO, Destimoney Securities, discuss the market performance of the day.
India’s equity indices witnessed 'Monday blues' as the foreign institutional investors (FIIs) hit the sell button on fears over introduction of General Anti-avoidance Rule or GAAR in the Finance Bill. They fear that investments into India via Mauritius may face tax demands. The BSE Sensex declined 308.96 points or 1.8 per cent on the first day of the week to close at 17,052. The Nifty ended below the 5,200 mark, shedding 94 points to 5,184. Rate sensitives took a major hit.
On our show Tips for Tomorrow, Vivek Mahajan, Head- Research, Aditya Birla Money and Sudip Bandyopadhyay, MD & CEO, Destimoney Securities, discuss the market performance of the day.
Watch expert comments on GAAR here
VIEW ON MARKETS: GAAR IMPACT
Vivek Mahajan said that the market is significantly dependent on the FII flows. “FII sentiment is likely to take a hit. Expect repatriation of hedge fund money,” he warned. Mahajan further said that the FII sell-off could hit even hit quality midcaps adversely. “Domestic institutions may not offset FII selling,” he added.
Sudip Bandyopadhyay suggests that the FIIs based in Mauritius will need to reassess their strategy after GAAR’s implementation adding that some FIIs may lack of commercial substance in Mauritius. He feels that Singapore offers a better alternative to migrate FII business. He is, however, awaiting clarity on implementation of the General Anti-avoidance Rule.
Another impact of this rule will be that Participatory notes (P-notes) and/or Offshore Derivative Instrument (ODI) structures may be re-evaluated. “P-notes, ODI may be viewed as indirect transfer of shares/ interest. There is confusion in the market about GAAR,” he added.
MARKETS TO DIP?
Mahajan expects markets to trade with a negative bias. He suggests investors to buy on dips as the Nifty may drop to 5050-5350 levels.
Bandyopadhyay sees the Nifty going to 5000 levels. “Expect more downside pressure,” he said.
SECTOR & STOCK PICKS
Mahajan advises investors to buy large caps with robust balance sheet. He is overweight on HDFC, HDFC Bank and M&M. He said that the FMCG stocks may outperform.
Bandyopadhyay is bullish on Pharma, FMCG sectors.