Demonetisation impact unlikely to last long: Gaurang Shah

Post the Reserve Bank of India (RBI)’s move on cash reserve ratio (CRR), the central bank is unlikely to cut interest rates in its next policy meeting in December, says Gaurang Shah, head investment strategist at Geojit BNP Paribas Financial Services in an interview with Aprajita Sharma. The markets are already factoring in a rate hike by the US Federal Reserve, he says. Edited excerpts:      Stock Market Astrology Tips

What is your near-term outlook for the market? How will the benchmark indices perform in the remainder of 2016?

Market could consolidate in the range of 8,020-8,050 on lower side, and 8,120-8,250 on higher side (Nifty spot). For the remainder of 2016, the downside looks protected at 7,950-8,000 (Nifty spot).

What is your outlook on the banking stocks in the backdrop of RBI's move on the cash reserve ratio (CRR)?

The RBI’s move on the cash reserve ratio (CRR) was in line with expectations and was most prudent, as excess liquidity had to be sucked out of the market. If it feels that necessary adjustments need to be done, then the upward revision in CRR could be back to normal level. Banks will have to pay to customers on deposits from September till November (on which the CRR has been hiked). However, they will not receive any interest. We remain positive on the banking sector with focus on private sector banks and certain public sector banks.   Intraday Trading Tips

Will the Reserve Bank of India (RBI) reduce interest rates in its next policy meeting in December?

The RBI is unlikely to reduce interest rates on December 7. Rate cut may be implemented in the first quarter of calendar year 2017.

How should investors position themselves for the next one year, given that the quantum of the damage on economy due to the currency demonetisation is hard to gauge? 

Investors who have invested in equity markets with a long-term horizon have no reason to worry. People need not be afraid for their investments if they stay invested in equity marketsfor six months to one year in stocks which have generated good returns. The perceived damage on account of demonetisation is not likely to last beyond three – six months and we remain optimistic and positive on the overall economic fundamentals.   Commodity Trading Tips