Dilip Bhatt rules out major corrections; predicts period of market consolidation
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, Founder,, says Indian markets , fueled by liquidity , face uncertainty due to the unpredictable behaviour of Foreign Institutional Investors (FIIs). Bhatt predicts a period of market consolidation if FII support waivers, ruling out major corrections. While valuations appear high as the market awaits clearer fundamental direction. FMCG stocks are poised for a resurgence in the coming quarters, presenting potential short-term gains.The market is still begging for a direction. The screens on the markets are clearly telling that they want to move ahead without any doubt, but somewhere the fundamentals will have to support them very strongly, this is what we feel which is not what it is at the moment. So, this quarterly results also may be a mixed bag because the tariffs have still not been spelt out so far and there may be some frontloading in a few sectors. That is why you will find that the performance may be good and in a few others it may be lagging.More importantly, what the management commentary is going to be is also going to be very important. My own sense is that markets driven by liquidity will continue to try to move ahead, but at the same time, the joker in the pack is the FIIs, how they will behave, and whether they are going to give consistent support. If not, my own sense is that markets at best will spend some time sideways, consolidating. I do not think there will be any big corrections. I will wait for the markets to give direction once the fundamentals are very clear, but clearly the valuations are very expensive.So, two things. One is that valuations certainly are not cheap, but they were never cheap, but some of the factors are really going to provide a good tailwind. I went through the pre-Q1 report of quite a few of them. Volume growth is emerging and more importantly, both the rural areas as well as the urban areas possibly will start showing a volume growth.That is going to be a huge change from the past because the volume growths have been very muted in most of the FMCG companies and with inflation cooling off quite a bit, that also will help them to shore up their EBITDA because not all of them are going to take a price cut. So, all said and done, over the next two to three quarters, we should see the momentum in FMCG stocks building up because they have been lying low for quite some time and there could possibly be some tailwind in their favour. So, the FMCG stocks look good for momentum and for possibly a short-term upward movement.
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