Vivek Mahajan of IL&FS says that the guidance that will be given out by the Fed will have a major impact on the liquidity flow and thereby on the domestic market as well.

The investors are advised to book profits at higher levels and reduce the position and there might be some buying ahead of the F&O expiry, he adds.

Excerpts from CNBC-TV18's exclusive interview with Vivek Mahajan:

There is some amount of recovery coming in. We have just about one trading session and about an hour and a half before the F&O settlement for the month of June so what is your expectation? Can we expect a post-noon recovery today?

This is only on account of the F&O expiry but one should not read too much into this. The investors are advised to book profits at higher levels and reduce position. There might be some buying ahead of the F&O expiry.

Tata Steel [Get Quote] and Sail [Get Quote] are down, and there is also a hint of downward trend on Hindalco Industries [Get Quote] and Nalco. What do you make of this meltdown that we are seeing, particularly in the metal counters today?

The concern is being raised because of the likely interest rate rise from the US. Any slowdown will have impact on the metal space as a whole. As a result, the entire pack is virtually under pressure. 

How do you expect the things to shape up once the Fed gives out its statement tomorrow and also once the earnings season start in the first week of July? Do you see things stabilizing and the market seeking some direction from thereon?

The valuation maybe attractive at the current point of time but the problem is the liquidity flow in the domestic market. There is a crisis of confidence and no one wants to buy at the current levels. Definitely, the numbers should be very positive but the kind of guidance that will be given out by the Fed will have a major impact on the liquidity flow and thereby on the domestic market as well.

Give us your reading of VSNL's [Get Quote] behaviour at Rs 400; there is a 5% spike and that is the kind of move that we saw yesterday as well. Despite numbers not really pleasing the street, what is the market betting on?

It is the same old story about the real estate, there maybe some development and that is why there is interest on the counter. The counter is very risky and one should be very careful and work only with the strict stop loss on the counter.

At Rs 989, what is your call on the Reliance Industries [Get Quote]? What are you recommending to your clients?

It is one of the better companies, if one takes the medium to long-term perspective. Looking at the growth plans that the company is talking about, I believe when the results start trickling in over the next couple of years, one could see whether it is a retail initiative or whether it is an oil and gas story. The stock looks very attractive if one is looking at medium to long-term perspective but in the short-term, the volatility maybe high on this counter.

Disclosures:
I have exposure on Reliance Industries Ltd and other than that I may have some exposure in metals.

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