Buy sugar, financials, pharma on declines: Experts

Excerpts from Closing Bell on CNBC-TV18 Watch the full show » RELATED NEWS Fund flows rush to emerging mkts, commodities: EPFR 4500 good support level for Nifty: Dipan Mehta BSE | NSE 10/02/12

The markets have been in consolidation mode for the past one week. The range has also been quite narrow.  So, where are markets likely to head next week? Experts see markets trading in a narrow range. They expect it to take out past highs but don't see cues to drive markets.

Sajiv Dhawan of JV Capital Services sees markets trading in a narrow range. "We are in some sort of a narrow band. There are no clear reasons why the market should break out above 5,200 or below 4,200. I do feel markets are on an upside. This quarter's results are likely to be good again and will keep the markets on the bullish side. Global negative news seems to have softened, global markets are also supporting. Unless there is a policy decision by the government which would curb capital inflows and unnerve the market it is very difficult to see why markets would slip more than 3-5% if a correction comes in at all."

Mitesh Thacker of miteshthacker.com too sees the Nifty trading in a narrow range of 150 points. "About 4,920 on the downside and 5,070 on the upside is what we see the Nifty trading in." However, he is unsure which way the the Nifty going to break.

Similarly, TS Anantakrishnan, Head, Prime Wealth Management, sees the markets consolidating between 4,800 and 5,100. He expects the Nifty to touch 5,500 in the near-term. He too advises investors to buy on dips but selectively.

Sectors to look at now:
Anantakrishnan is bullish on the commercial vehicles sector and the commodity space, both steel as well as the non-ferrous side. He asks investors to reduce exposure to banking and get into defensives. "From the pharma space, we like Lupin. We also like ITC from that perspective. We have been reducing our exposure on financials and more into the pharma side. Given that our expectation is that interest rates will move up, we prefer private banks over PSU peers because historically they have done better during an interest rate upmove."

On financials:
Dhawan is bullish on financials and advises buying on dips "This sector is likely to be an outperformer in bullish markets. Valuations still are reasonably okay in an otherwise relatively expensive market. Dips should be bought into."

On sugar:
Thacker sees sugar stocks entering a much broader range. He feels it is still a good sector to buy on declines. "But the upside in the short-term could be limited to around 5-8%."