Excerpts from CNBC-TV18’s exclusive interview with Ajay Parmar:

Q: We have been relatively resilient compared to Asia over the last few trading sessions. Asia has been selling off. What are the key macro pictures that our markets are primarily looking at right now? Is the underlying short-term trend relatively bullish?

A: At the macro level, all odds are against us; whether it is commodity prices, crude oil, raw material prices of steel, internal problems like inflation, GDP, IIP numbers, or the fiscal imbalance.

Within all that, I see the market somehow trying to digest such kind of falls. On May 21, we saw the market going up. Today, it is just down 200 points. We should have been down by some more. This is not what I expected.

Q: In the last two weeks or so, the fundamentals seem to have turned even more distinctly negative for the same macros. Inflation has gotten much worse, the fiscal imbalance looks way more difficult to manage and there is the impact on currency as well. Given the turn of events in the last week or two, would you say that the lows that we had gotten used to could still be challenged and that we could see some severe reverses in the market in the next one or two quarters?

A: As far as the entire episode of inflation is concerned, if you look at the impact because of global reasons, we may get used to such kind of higher inflation. It may not be at this level and may be 6% would be a stable figure.

As far as the government is concerned, they are trying their level best. But I do not see how you can you really reduce the impact that has come to the steelmakers by any fiscal measure. You cannot remove it by just giving some fiscal incentive or disincentive. So, the cost is going to go up. Margins are going to be squeezed and interest might also go up. Today, we have enough liquidity and are not in a busy season. So, we do not see any immediate increase in interest rates.

Q: What is the advice for a stock market player or investor? What would you get into if you were recommending buys?

A: In the short-term, the market might be weak. But we still advocate companies like Tata Steel in metals, Idea Cellular in telecom, Maruti in auto, and Aban Offshore in offshore services. So, you have to look at some sort of a defensive sector.

Telecom was not defensive some time back but now looks more defensive.

With respect to pharma, we are looking at Jubilant and Dishman. So, these are the four or five sectors one can look at. Over a longer period of time, if you see medium to long-term, the India story still remains intact.

Even in the worst-case scenario people are expecting GDP to slow down to 7.5%, which is not really bad. 

Q: How are pharma and IT looking to you?

A: In terms of IT, we are quite bullish on Satyam, which is available at 13 times and MphasiS, even though there is news about the takeover code. With the takeover code or not, the company is doing extremely well and EDS support; the new parent support will be there anyway. So, these are the two companies.

But what I want to emphasise that is it is not going to be sectors but specific stocks within the sector that can give you better returns.