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RBI policy, budget to drive market in near term: Avinnash Gorakssakar
January, 16th 2013

The two key events in the broader market that we will be watching out for is the policy meet at the end of this month as well as the budget. Do you think that they could potentially keep the momentum for the Indian markets intact?

Yes, these are the key market drivers going forward. Till the time these events do not unfold, the markets would probably remain in a very close range and for the markets to move above the 6100 level, the first trigger would be the policy on the 29th. In all probability looking at the kind of inflation numbers which came in yesterday, my sense is a 25 bps cut is definitely expected and, going forward, if the budget actually delivers more on the positive side and is not a populist budget, that is something which the market would clearly like and be a good positive surprise. So the budget would be the second big trigger and after that the markets could get further re-rated.

It is positive momentum all the way for TCSBSE -0.81 % post the stellar set of numbers. You have got a lot of brokerages also which have upgraded the counter from a sell to a buy. They have raised the target price as well. Do you think that all of the good news has now been priced into TCS and would you now look at some of the midcap names as well, the likes of HexawareBSE -1.18 % which was showing very smart momentum today?

Actually in terms of valuations my guess is clearly TCS valuations look definitely fair to a slightly expensive. Now if you look at near-term FY14 valuations, clearly the kind of visibility shown by TCS and the kind of market expectations people had they have clearly outperformed them.

But on a price point of view, incremental upside would definitely be limited from now on. Clearly Hexaware, especially KPIT CumminsBSE -1.86 % from the small cap space, would be interesting to watch because clearly there the price movement is yet to catch up and probably there is some more money to be made on the table considering that the base value is smaller.

What is your view on the pharmaceutical pack because most of the analysts expect that with strong growth in the US as well as emerging markets, their favourable currencies, those will be some of the key drivers and you can see a good outperformance here. Do you agree?

Actually it would be a stock-specific call, in terms of the currency favourable movement and in terms of the US markets stocks typically like a LupinBSE 0.44 % or a Dr Reddy or for that reason even Ipca LaboratoriesBSE -0.35 % from the small cap space. These are the stocks for which this quarter would be a very good quarter. In fact, you could also look at Cipla. CiplaBSE 0.99 % is also going to show strong margin enhancement, good top line growth. So I would say these companies would be clear outperformers in the Q3 season.

How about the real estate sector because yesterday we did see DLFBSE -0.26 % getting re-rated by one of the brokerage houses where the brokerage house has suddenly turned overweight on that stock. Would you say that your view on the real estate pack in general has begun changing?

At a very moderate level I think that real estate as a pack would definitely catch the momentum considering the fact that the rate cut benefit would definitely flow to these companies, but within the real estate companies I would still put my bets on some value plays like Oberoi RealtyBSE 4.38 % or Godrej Properties.

Clearly DLF seems to be more of a speculative kind of momentum trade. If one really wants to put money on the table for some value which could unfold in the real estate sector, then quality plays like Oberoi Realty and Godrej PropertiesBSE 0.63 % could definitely be looked at.

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