MR Anand Tandon of Gryffon Investment Advisors does not rule out the possibility of the Sensex touching the 10,000-level prior to the Budget. He also says overall equities seem to be positive next year, while money making might not be very easy in the markets. Market valuations look stretched, he says. Further he says that inflows will also be positive in the first couple of months in the new year. Mr Tandon is bullish on HDFC Bank and other private sector banks from the banking space. Excerpts from CNBC-TV18's exclusive interview with Mr Anand Tandon:

Is 10,000 the short-term target before the Budget for the market?

It is quite possible, since at this level it is less than 10 per cent away. But overall the next year will be a good year for equities, not necessarily a great year for making money though. I think the number of issues that are lined up for the next quarter are phenomenal. That would usually mean that there would be some pressure on the secondary market because a lot of money will get moved into the primary issues when they come in. Since they are coming in back to back, the ability to churn out and move into the secondary market is much lower. The inflows are also supposed to be quite high in the first couple of months. There is a need to wait and see because it depends on how the year actually ends and where it is likely to start off in the next year.

Will it be a good year for the long-term investor, or will it be difficult to make money there as well?

It depends on what we define as a long-term investor because in terms of valuations, the market is somewhat stretched. If we look at all the other asset classes, we will find that it is reflected in other places as well, starting from gold to real estate. There are pockets of real estate, which are grossly overvalued, especially in North India, and Delhi and there are other pockets, which have some more way to go. So the same will hold for equities as well. There is no doubt that there will be companies, which will come up with startling performances and still show phenomenal growth numbers. But for the broader market, I think most of the good news is in the price.

Banks, how are you looking at that segment?

HDFC Bank is an outperformer and will continue to be one. It is one of the best-managed banks and therefore will continue to enjoy higher than industry growth rate. That would be true for many of the other private sector banks as well. The public sector banks will be a little more under pressure because they are generic in trend and, therefore, there is not much to choose between one and the other. Also, the fact that many of them will have to raise significant amount of capital and they don't have the immense skills that ICICI Bank has demonstrated in making sure that investor interest is so high that a large issue can sail through.

How much would you keep aside for primary market issue next year, and how much would you invest in the secondary market?

We are only secondary market players. We don't believe that one should go into the primary markets, just because somebody is offering paper. It is an insider selling, so he obviously knows more, and if he thinks it is a good price to sell then he shouldn't be buying it. But there are people who invest only in the primary market. So I don't think it is an asset allocation decision there. I think it broadly remains an issue of whether we can find good value in the stock or not.

Divestment, public sector sale. Is it so much an insider taking a call or are there other factors involved as well?

In the public sector, we are unlikely to see unlisted companies coming in. What we are talking about is the stake of follow-on sale of existing companies, which are already listed. So you already have a benchmark price and I think the Government will follow the policy of giving retail discount, therefore I don't think there will be any major problems in terms of selling those shares.

© Copyright 2000 - 2009 The Hindu Business Line