Is the time right to enter into the Indian Stock market?

Although it is tempting to take the opportunity to buy stocks on SALE... I mean they are really on SALE!!!

India has been an emerging market with double digit GDP growth. Lot of foreigners are investing in Indian stocks and have gained double digit returns. Today the sensex (BSE) rose by 259 points.

According to Sandeep Nanda Head of Sharekhan it is better to wait for a bit before entering the markets to see how the markets react to economic data rather than just being optimistic on Fed cuts and so on.

He further adds that for Q2 earnings season, one needs to watch out for the stocks, which gained on on forex gain in Q1 as we might see, a reversal on that.

He are the Excerpts from CNBC-TV18's exclusive interview with Sandeep Nanda:

Q: Would you wait on a bit and then enter the market?

A: Yes. It is tempting to conclude that things are stabilized but I would recommend waiting for three-four more days in the sense that this has been a peculiar week in the US because all the data has bunched up towards Friday and next Monday.

I think we need to see how markets actually react to economic data rather than just being too optimistic on Fed cuts and so on. I would definitely wait for that and by then our own domestic political situation will also become clearer.

Q: Do you see much of a squeeze on liquidity going ahead for the next couple of months as a whole and how do you approach the next earning season, which is just about a month and a half away?

A: We are running a current account deficit and because of the change in ECB guidelines as well as whatever is happening globally, liquidity is definitely going to be tighter.

Our capital inflows are about 2%-3% of GDP and that is definitely going to be a problem and if the political situation is a bit dicey or all the political pundits are saying that we will have elections in three-five months then I guess even the rupee will be a bit weaker so one should play along with those trends.

As far as earning season goes, we need to particularly watch out for stocks which gained in the first quarter on forex gain. I think we will see a lot of reversals on that. We saw it in Reddy or Ranbaxy or Reliance Industries, RCOM, Tata Motors, Tata Steel we saw all of these stocks gained a lot on the forex front, so one needs to start factoring in the reverse of that in Q2

Soruce: Moneycontrol.com