Devesh Kumar, MD of Centrum Capital said consumer non-durables are likely to do well. He expects rupee to depreciate to 42-43/USD levels. He said market is likely to be rangebound and Sensex is seen between 15,000-18,000.

Excerpts from CNBC-TV18's exclusive interview with Devesh Kumar:

Q: Which camp are you in. In the one that says, the market will be ranged or the one that says it might test the lows we have seen earlier this year?

A: I think the market will be range bound, we have seen the worst and the market is looking for some direction. Unfortunately we are in an election year and I think either internally or from the global side, nothing is going to be so significant which says that now our valuation paradigm is changing and markets should be in a new range. So I feel broadly that 15,000-18,000 there is a band and in case market crosses 19,000-20,000 then probably one should be in cash waiting for one more round to take a dip.

If long-term investors take a two-year view, then one has chances of 180-200% gain and annualised gain will be around 40-50%. So this is a time for long-term investors to pick the stocks and be with them for longer-term. Traders will get plenty of opportunity to trade. Fundamentally nothing is going to come which will pull up the market to a new range and in such situation one should be with value picks and if one is getting good business for four-five times multiples, I think it's a great time to buy it and be with it for sometime.

One should be away from the group stocks for the time being and Indian macro story continues to be robust. But for the time being it is under a shadow and therefore whatever is played in India, such as engineering and real estate, all this will be under a cloud for some more time.

If you look at IIP, then do not look at consumer goods index; look at FMCG where consumer non-durables and I think this sector is going to do well because people will be away from interest rate sensitives, consumer durables and so their consumption basket share of non-durables is going to go up.

I think technology is going to benefit from weakening rupee and on capital count if FIIs keep away and FDI decisions have not been made during next 12 months because people will like to see the new government and how they dispose off economic matters then we will see a drop in flows on capital account, which is good news for RBI because they have been worried about managing forex inflows. So we will see rupee depreciating, it will be moving towards 42-43 and in such a situation technology companies would do well.

In terms of their business; right now they are finding business in domestic market and I think from US outsourcing that space will also go up, because they will not have any further option; they will have to shift their cost. So broadly this is what we feel at this juncture. 

Q: To the fund flows situation like you pointed out, the market is expected to be ranged between 15,000 to 18,000? Given the kind of interest that India is generating internationally, you think that range could be broken in CY08?

A: One is a theme based story; I think at this juncture globally people are under pressure to show their near-term performance. If one looks at the period before 2002; in our market we were looking from QoQ stock performance then came a phase where people were looking at broad stories and growth stories for longer-term.

I think suddenly we are back in a situation where expectations are not being met and corporate and economic performance, both are not meeting expectations of investors and so we are in a situation where even if one agrees with a long-term story, he will try to avoid stocks which may not give right outcomes in the near-term and therefore market will remain range bound. The moment market crosses 19,000-20,000, one will find that a lot of selling will come and as far as FII inflows are concerned, on the margin they may become positive but it is not going to be a big number. So from hereon FII and FDI will be a smaller number in the market.

Q: Purely as moves, how do you read these open offer things that come in from the global market? How keen is your sense that they are to pick up a lot of additional stock from the open market?

A: Here a lot of businesses are available at attractive prices, so for people with money, it’s good to acquire businesses and I think this is also a part of that. I will not be able to comment on their internal strategy, but I think today it make sense to pickup from market stocks where one wants to acquire a company and stock is trading at very low multiples.

I am sure we will find many such stories going forward in the next six months and we will also see cases where promoters themselves will like to increase their own stake. But unfortunately wherever they are more than 50%, that luxury is not available.  

Disclosure:

It is safe to assume that my clients & I may have an interest in the stocks/sectors discussed.