Mumbai: The head of equity investments at Reliance Mutual Fund, Madhusudan Kela, sees the National Stock Exchange benchmark index Nifty setting a new high in the next 12-24 months on account of higher fund flows and improving economic fundamentals. Asked in an interview whether the Nifty can retest its previous lows, Kela says he does not see the index breaching the 3,800-4,000 levels unless “something globally happens.” Edited excerpts:
Right pick: Reliance Mutual Fund’s Madhusudan Kela says the real challenge lies in identifying the mid-cap firms for extra earnings.
Do you think now that we have formed a base for the Nifty we should not look too much southward of 4,000?
Yes. Going by what is being presented as of now and going by the trend of last six months, I would argue that the 3,800-4,000 level must hold...
Do you see the Nifty retesting the 3,900-4,000 kind of levels and, if yes, what could get it there because it is not going there, it is just taking support at a higher levels of 4,300?
Too many people are waiting, I am also one of them because we keep getting money and we definitely have some cash.
A lot of cash or a lot of it has been deployed?
No, I don’t think there is a lot of cash now. We have deployed it. For the last three-four months, we (have been) deploying it. I think the only thing which could take Nifty to that level is if something globally happens. The last two-three weeks for the monsoon have been reasonably good. So there is something which has to go wrong globally for the Nifty to go back to 3,800-3,900 levels.
June, July, August we have spent in this broad range of 4,000-4,700. Do you think we are ready to break out now or would that be surprising to you?
For various people, market means various things. For a day trader, it is very important to time it for the day. For investors, we look for a consistent period of outperformance. Whether 4,700 is taken out in the next two months or it is taken out next month—that is less important to me than saying that are we really heading for a new high in the Nifty in next 12-24 months. I think we are heading for it.
Twelve months or 24 months?
Twelve to 24 months. The direction is very important and the most important thing for forming that judgement is you see the amount of liquidity which is being thrown in the world, which is running into trillions of dollars. Now, you are starting to see the real economic fundamentals also start to move up. Every data point which we have been observing for the last three months in the West has surprised and is optimistic. It is better than what the world was expecting. So if you have a slow but decisive fundamental recovery and money coming into emerging markets because of the dollar being weak, then we should definitely head towards a new high in the next 12-24 months.