Markets to remain volatile for another month: Nirmal Jain, MD, India Infoline

According to managing director of India Infoline, Nirmal Jain, the fall witnessed in the market is not due to the weakening of fundamentals or crisis of fundamental of economic nature. He thinks that the market will remain volatile for the next one month, and it will see very steep falls as well as bounce-back. He advises people to reduce leveraging as much as possible and wait for opportunities. Excerpts from CNBC-TV18's exclusive interview with Nirmal Jain.

Are there still extremely leveraged positions that need to get corrected, and are you expecting another bout after this pullback?
Almost 50 per cent of FII money is through hedge funds. Some of these hedge funds need to be leveraged. On the other hand, there have been quite a few good FIIs as well as good retail HNI customers, who have been sitting on fence and waiting for an opportunity to enter the market. So markets will remain volatile for next one month, and will see very steep falls as well as bounce back.

What are you buying?
No, we are very company or sector specific. We are bearish on commodities because globally there is turbulence. At this point of time, we cannot advise our customers to get into steel or non-ferrous. But at the same time, we are bullish on some sectors like hotels and cement.

These are good opportunities. So customers, who have been sitting on cash or exited the market at 12,000 levels, when the markets were overheated, can re-enter the market. But again slowly, probably because there can be one or two more rounds of floppy sales out of panic reactions in the market.

Would brokers be asking their clients to cut positions? What are you doing at India Infoline for the F&O clients?
In our case, everything is software driven. So it is not that we have to tell them to cut or not cut positions. It automatically happens. The limits are automatically monitored on real time basis.

Certainly, in terms of advice, one would say to reduce leveraging as much as possible and wait for opportunities. But leveraging is something, which is bad in any market because it is like an addiction.