Taurus Mutual Fund, which has been a low-key player in the Indian mutual fund industry, is currently on an expansion drive. From five branches at the start of the year, the AMC has expanded to 21 branches now. It is also shifting its base from Delhi to Mumbai with two third of its staff already moving to Mumbai. In an interview with Rajesh Abraham, chief executive of Taurus Mutual Fund Waqar Naqvi says the market was seeing a lot of resilience and he will not be surprised if the Sensex goes up to 17,000-odd points by October-November. Excerpts:

What is your call on the market? After bouncing back in July, the market is going down again? Will we see buying at lower levels?

We are seeing a lot of resilience in the market. Every time the market goes down, buyers come in hoards to lift sentiments. The market is bouncing back every time it goes to 12,500-range. Considering that in the next two to three years, savings in India will be humungous, we are positive on the markets. In the short term, one needs to watch out for RBI hiking rates one more time. Perhaps, this seems to be the likelihood. I would not be surprised if the market goes up to 17,000 levels by October-November. You have definitely value buying happening. Besides, the FMCG companies are still reporting increasing sales, which is a positive in my opinion.

We have seen net FII outflows since January this year? When do you see a net inflow from foreign funds?

The tilt has been towards going out. But, with the commodities cycle slowing down, FIIs do not have many options. Unfortunately, we cannot predict when they will come back. But, as a market, we are, to a large extent, dependent on FII inflows for the market to go up. The good part is that this time with FII pulling out 35 per cent of their money, the market went down only by 25 per cent.
That is a good arithmetic equation in the favour of Indian markets.
In times to come, we will see more money flowing into the market from life insurance and mutual fund companies, pension funds’ and public sector companies, if the government allows them. They all won’t get activated together. Salaries are still increasing in India. In the next three-four years, you can safely say that the salaries will continue to rise.

What is your call on interest rates?

We might see another hike in October. We still have inflation at 12.63 per cent. The silver lining is that the RBI has enough money to play it both ways. Forex reserves are a good indicator of how much money you have. If RBI wants to inject liquidity, it can safely do it without much trouble.

The hike will be at the cost of growth?

It will hurt growth to an extent. RBI has the option of either ensuring growth or curbing inflation and I think it will go for curbing inflation. I think investors will be cautious on companies with huge borrowings at this point of time.

How do you analyse the corporate earnings for the first quarter?

First quarter has been mixed. It has not been disappointing also. But, from the earlier quarter, definitely the earnings have come down. We really need to watch the September quarter closely. There were two hikes coming in this quarter. And the previous quarter’s hike will also come into play during September quarter.