The Indian market witnessed a stellar rally over the last two-sessions. Sangeeta Purushottam, managing director of Nine Rivers Capital says it is just a relief rally. I think there is still enough uncertainty around to keep the market turbulent for a while, she adds.

Year 2011 has been a tough year for the market, investors are now pinning their hopes on 2012. 
Although Purushottam says there would be a new low somewhere during the course of the next year, she believes that investors will get good long-term opportunities.

Also read: Market may test new lows over next one-year, says Emkay Global
Below is the edited transcript of her interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: Do you think its a year-end relief rally or anything more substantial than that?
A: I would look at it as a relief rally. I think while some positive signs are emerging in terms of domestic interest rate cycle, it is too early to expect the markets to turn. That will happen sometime during the course of next year. But for the moment I would look at this more as a relief rally. I think there is still enough uncertainty around to keep the markets turbulent for a while.

Q: Do you take any comfort from the fact that atleast in the last few days yields have cooled across Europe or is it too premature to think that the crisis is over there from a market perspective?
A: It is too premature. But there are signs of hope. The same is likely to happen domestically as well. As go along we will start seeing little bits of positive news just popping up. But its too early to say that this is representing a decisive turn.

Q: The big sector of pessimism has been the financials. You saw the RBI stress report on it. How would you approach the financial space because that seems to be a leading marker of what the market is going to do next?

A: Yes that is right. I think it is very closely linked to the call on the economy. It is a sector which will bottom out along with the market and then represent extreme value. And then help the move thereafter because it represents a fairly large proportion of the indices. So, its going to move pretty much along with the macro call.

Q: What do you make of this complete decimation that is going on in midcap valuations? Do you think they will bounce back anytime soon or will they continue to lag the largecaps even in recoveries?

A: Typically you do see this phenomenon happening, when the markets are bottoming out. So, the largecaps will be the first one to recover and then the midcaps will recovery, but with a bit of a lag.
When you see overall valuations coming down, a lot of people tend to feel that I am getting large well run companies at close to historic lows or five-year or two-year lows so let me first play that and then look at the midcaps. That is the way people tend to look at things.

However, if you look at from a long-term perspective, then many midcaps are attractive valuations. Its possible that they may get even more attractive during the course of next year. So, its going to be a fairly good time to pick up stocks for the longer-term.

Q: What do you make a news on the telecom space? Is it material in your eyes?
A: I think its yet another element of uncertainty, as far as the sector is concerned, along with the fact that most of these companies have fair amount of debt and part of it is in foreign currency. So, it just adds to the pressures that the sector is facing. It doesnt really help their cause in any way, if you look at it from the other perspective.
Q: What is your call on the market do you think a new low is awaiting us sometime in the next three-four months or do you think the low is somewhere close to this 4,500 zone on the Nifty?

A: I think there would be a new low somewhere during the course of the next year. Having said that, I think the next year is going to be quite interesting because its really when you are in a market phase like this that you get really good long-term opportunities. The way to look at it is, yes, in the short-term there will be pain as far as head line index numbers are concerned. But that is where the seeds of opportunity are laid. So that is the kind of year I am expecting.
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