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RBI policy and Budget will influence markets
January, 19th 2010

Markets seem to be in a consolidation phase at this point of time looking for the next breakout on the Nifty. When do you see that happening?

Two events that will take the market forward from wherever it is one is the RBI policy, market analyst are expecting some hardening stance from the RBI Governor which I dont expect, may be we may say some 0.25 to 0.50 basis point of CRR hike thats it

Apart from that I dont see much into it. So once the policy will be out, we will see a huge rally coming up in banking space - particularly PSU banks.

Apart from that whatever news we are hearing like NBFCs will be allowed to mop up the private bank. Thats a great news. So small private banks will also participate in the rally and the second one is like budget thats coming up on February 28. So till budget I am expecting the market to be somewhere between 5200-5500. 5500 will be that may be on the top end and 5200 on the bottom end.

So once the budget will be out - I am not expecting much from the budget same subdued speech from the FM but will be a balanced one.

Cash subsidy has been handed out to those oil marketing companies. Would you start building positions in these companies based on the fact that the government at least seems to be indicating that by March we will have some clarity?

No, I would like to remain away from OMCs because I am always away because I dont like wherever there is much of the government intervention. I am away from those type of companies.

Three stocks in focus today as the IPL auction kicks off of course Deccan Chronicles, India Cement, and United Spirits. If they do start to bid heavily for players and India Cements for one has two slots free will looking at the enterprise value being directly affected?

India Cement I am tracking and I am pretty bullish on the stock. Cement industry as a whole I like very much and I think that its mostly undervalued right now so far the cement pack is concerned. So I would like to accumulate India Cement at these levels also.

What are the three PSU stories that you are backing right now?

MTNL is one of them. We may see the same sort of story like Nalco coming up in MTNL. We may see a kind of restructuring could happen in MTNL.

It may be subdivided into three companies one may be telecom infrastructure company, one as a telecom service provider company and one as a real estate company. So once again the book value is Rs 197 of MTNL and it is available with the 50% discount. So that is one of the stock I would like to look at.

Another is ITI. Government has already restructured it and I think that it has a great future going forward and one is RCF.

Why would an NMDC or a State Trading Corporation and Hindustan Copper not be part of your list?

I think its already run up, I mean its all 50% up from wherever it was in this last one and one and half month. So it has run its course and the undervaluation is not there.

I think MTNL is underowned as well as undervalued and a fantastic restructuring story could come up going forward. So I think may be one should look at those stocks which have not run up and where those companies which are cash rich as well asset rich.

How is Sterlite looking to you?

Its a fantastic story once again and once they will able to mop up the money, I am sure that then we will see next round of the stock moving up once again. So I am pretty bullish on Sterlite Technology also.

Would you invest further Zee Entertainment, Sesa Goa and GAIL?

I would like to bet on GAIL. I am not interested in Zee either the Sesa Goa. Both of them have run ahead of its time. GAIL I am pretty bullish and I have fantastic targets on GAIL.

What are do you expecting from that ICICI Bank?

It will remain absolutely range bound as per Nifty and Sensex. Its a Nifty stock and Sensex stock so I believe that it may range between 850 to 900 odd levels.

I am not expecting a great future from this company and so far price movement is concerned, I would like to go for small private bank like of DCB, Karnataka Bank, South Indian Bank. Those are the stocks which I would like to look at this point.

How are you placing yourself as far as IT is concerned?

So far IT is concerned, I personally believe that there is only one problem area and that is currency. Nothing else that I am much worried about. We will see definitely top line growing constantly but so far bottom lines are concerned, once again it will depend upon how a company hedges itself against the currency.

But still I would like to bet on TCS, Infy, and Wipro. HCL Tech is one of my top picks among all the four biggies. Satyam is where I would be interested at this point in time. Apart from that Polaris is something which I would be interested. Aptech in the education IT space and NIIT.

How do you feel Reliance Capital is holding up at the moment?

I think where Amar Singh will go it all depends upon that in fact I am bullish on Reliance Capital as well as Reliance Infra and I like both of them.

You are clearly not bullish or you are not taking any action as far as the OMCs are concerned but you mentioned GAIL as a pick. Now the problem is that one really does not know whether upstream companies like a GAIL or an ONGC will have to once again pitch in as far as the subsidy sharing burden is concerned. Is not that a bit of an overhang for you?

Yeah, there is some sort of overhang in terms of GAIL but still I will bet on GAIL because apart from upstream, it is also into this gas transmission and I am pretty bullish on that particular sector.

Any of those stocks looking interesting to you?

Suzlon looks interesting to me. It is alternative energy space. It is cleaning up its balance sheet, restructuring in a big way. One should bet on Suzlon but purely long-term play. We may see one and one-and-a-half year down the line, it may double from the current levels.

How are you approaching the FMCG pack now, especially ahead of numbers?

It is attractive in terms of if one would like to play defensive, then its attractive, thats it. But apart from it, there is no asset play, there is no growth story. Its something what one could look at it just because if at all somebody feels that market is not going to be in a great shape, then one could look at FMCGs. I am not dead bullish on FMCG. I am just bullish on ITC, thats it in the FMCG space.

Do you find anything exciting in realty space? DLF has finally seen some kind of a break-up but do you feel it is still risky?

DLF, once again we will see a range bound movement only on the stocks but I am pretty bullish on Omaxe, Ansal Infra, Ansal Housing, Parsvnath. These are the second rung real estate stocks and once again I am bullish just because it is available at an attractive valuation.

It is purely value play and we will see a growth play also coming into picture going forward so far real estate as a whole is concerned.

What are the stocks that you are considering including in your portfolio?

Sector specific, I am pretty bullish on PSU as a whole, PSU banking and some rate sensitives. If you ask me about stocks as I told you MTNL, ITI, RCF in the PSU pack.

So far PSU bankings are concerned, I am pretty bullish on Bank of Maharashtra, IOB, Andhra and Syndicate Bank.

In rate sensitives, second rung real estate pick likes of Omaxe, Ansal Housing, Ansal Infra. So those are the stocks where I am bullish rate sensitive PSU and PSU banks.

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