Finally after 53 days of long waiting, Sensex crossed 16k mark with strong support from banking, oil, auto and metal stocks and closed above 16,300. Midcap and small cap stocks also joined the bandwagon.

The slashing of interest rates by the Fed impacted the global markets positively and Sensex surged 666 points during intra-day trade after struggling with many hurdles like subprime lending in US and Europe, Yen carry trade, political situation on nuclear deal with the US etc in the last two months.

So now with all awaited Fed meet over, experts are looking at the earnings season for the next fillip.

They are of the view that there are some sectors that will do well in this forthcoming earnings season. To name few, Telecom and capital goods, power and power ancillary and engineering are some of them.

Currently, the telecom sector has nearly 240-250 million registered subscribers and this is likely to grow further. Capital goods sector also has also lot of opportunities.

Ajay Srivastava of Dimensions Consulting said, “ One should go on to that sector that has a clear earnings visibility like capital goods, telecom, which are ready for a little breakout.”

Balasubramaniam of Birla Sunlife Mutual Fund, said, “The fund house has been bullish on power and power ancillary related segments and also engineering”.

IT, banking sectors are few sectors where investors should maintain caution.

Talking about the banking sector, Srivastava said that he is not so sanguine because RBI is unlikely to cut rate cut, which we think is going to happen.

He said, “The IT stock will get a breather because of the uncertainty in rupee-dollar fluctuation which the market has observed. The big issue was the sub prime mortgage issue in the US market and that impacted the banking sector. I think some worries have been taken of the table by last night and I can see very clearly that there will be some respite in terms of selling. I’m not sure buying is going to happen any more but selling might just stall for a while.”

Nandita Parker, Karma Capital Management said, “Tech has been beaten down a lot and it remains to be seen whether the Fed is really ahead of the curve in staving off recession and if that is the case then there is case to be made for the IT sector but lets remember there are two negatives still out there - rupee appreciation, which is a distinctly happening, and also wage increases. So there is still the fear of that.”  

In the auto sector, experts like Srivastava see Maruti and M&M as the only two stocks where one can park his money.

He said, “There are only two stocks, Maruti and M&M, to play within the auto segment. Bajaj Auto has an issue of demerger coming up which has value in it so one can wait through the whole demerger issue. There is some substantial value in the demerger process.”

Jagdish Malkani, member, BSE, also believes that Maruti and M&M are good stories and further says that if RBI does not cut down interest rates then it will slacken auto sector’s growth rate.

“The RBI will take a leaf out of the Fed’s book and need to lower interest rates otherwise growth rates will slacken off. If that happens then huge beneficiary will be auto. They were frankly quite beaten down, we have got some great stories Maruti, M&M etc”, said Malkani.