Mkt headed higher; Tata Motors, Maruti good bets: IIFL

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Mkt headed higher; Tata Motors, Maruti good bets: IIFL

The continuous uptrend in Indian market is reflected in the 200 point gain on Wednesday morning, which took the Sensex above 18,000. It also suggests that traders are not in a hurry to book profits, says Sandeepa Arora of IIFL.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other FIIs are saying about the markets See what other experts are saying about markets See what Udayan Mukherjee is saying about the markets

The continuous uptrend in Indian market is reflected in the 200 point gain on Wednesday morning, which took the Sensex above 18,000. It also suggests that traders are not in a hurry to book profits, says Sandeepa Arora of IIFL.

Speaking about the upbeat mood, Arora said sentiments have turned around in favour of the bulls since the January rally and the funds are likely to flow through February. She sees strong Nifty support at 5,000-5,200 .

Arora also foresees a benign interest rate scenario going ahead. Any fall in interest rates will aid infra counters, though fundamentally infrastructure companies have not made any remarkable shift, she said. She is bullish on Tata Motors and Maruti and continues to prefer blue chips with strong balance sheets. Among the high beta counters, DLF and JP Associates are her preferred bets.

Speaking about the impending Union Budget, Arora said the market is not expecting any negative surprise from the Budget, but at the same time investors are not enthusiastic about government's divestment programme.

Below is the edited transcript of Arora's interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying videos.

Q: Are you cautious, skeptical or are you playing along with the current rally?

A: We have seen a very good market since the beginning of the year. I wouldn't be skeptical at all. Markets are heading up and it looks like the momentum clearly turned in the beginning of the year. So, I feel that momentum will continue for a while.

Everyone is saying it is a liquidity driven rally and it is. The sentiment completely turns around when you have a sustained rally with the kind of volumes that we have been seeing. So, I would be a lot more optimistic.

Q: I hear you are super bullish and you see the chances of a new high this year, that's what you are holding out for?

A: I think so we are headed there. The momentum is in favour of that happening. It is also important to note that a lot of people have not been part of the rally; they haven't participated in a big way.

So, there is still money sitting on the sidelines waiting to be invested. Keeping that in mind, the markets could consolidate at levels over the course of the year, but despite all of that we will see higher highs.

Q: What are you telling your clients to do on Tata Motors after seeing yesterday's numbers?

A: We have been bullish on the stock on both Tata Motors and Maruti. The JLR numbers have been extremely positive and that momentum will carry through although the stock has done exceedingly well.

I don't know how much more it has to go, but if you look at the numbers coming through from China, I think that momentum will sustain on the JLR front. The only worry being on the car front domestically, but that has been a concern for a while. So, JLR is the big story and that continues to look good.

Q: You had nearly 600 investors at your conference and you have got a lot of old long India money that's coming to this conference. Are you getting the sense that that's the kind of money that's getting back into the market with a longer term horizon?

A: We have seen that kind of money move in surprisingly right from December onwards. Mid December is typically a very lean period we saw lot of money coming in between December and January, long only as well. Of course not in the high beta names but it has been coming into India at a regular pace and still continues. So, the sentiment is that a lot of negative has been priced in.

If results are anything to go by we have seen some of the worst numbers come through and the stocks have been up. This shows the fact that a lot of negatives were priced in. There was tremendous amount of pessimism in December. It was a consensus pessimistic opinion and that's what has surprised most people. The rally has really surprised people because across the world I was only hearing pessimistic view.

We have also been helped by the fact that we are seeing a lot of recovery in America, don't know if it sustains. Europe looks to be turning around, but we don't know whether it sustains or no. But for now the price of risk globally has gone down and you have seen tremendous liquidity that's come through.

Liquidity is the key in markets. It has taken so much of money to move it up and that money seems to be coming in. Till that happens we will see the momentum continue. But long only funds, it has just been a bottom-up approach for them. So, they have been investing in India right from the mid December levels and they continue to do so.