Experts pick stocks/sectors for volatile mkts

The BSE Sensex climbed 0.7% on Tuesday, stretching gains for a third day, as European and Asian markets saw some respite but the outlook remained clouded by uncertainties.

Export-focused outsourcers such as bellwether Infosys Technologies, bigger rival Tata Consultancy Services and No 3 Wipro led the rise on a view their recent fall was overdone.

The 30-share BSE index closed up 0.67%, or 106.57 points, at 16,042.18, after seesawing in early trade. Nineteen of its components advanced. The 50-share NSE index closed 0.7% higher at 4,792.65.

"Savvy traders would have noticed a lower-top-lower-bottom formation in the index," said Technical Analyst Vijay Bhambwani of bsplindia.com.

Bhambwani remains bearish on the market in the short term. "You could see 4,600 or 4,650 on the Nifty [ahead]."

Foreign funds have pulled out USD 1.7 billion over the past 10 sessions, pushing the main index down 8% this year.

In 2009, the benchmark had jumped 81% when foreigners had bought shares worth USD 17.5 billion.

Satish Betadpur, Global Research Director at Independent International Investment Research PLC, said the current crisis in the Euro zone was weighing down on global equities recently. "This crisis over the whole concept of euro zone and euro as a currency has come into question will get settled one-way or another. When it does, it will trigger a rally."

He continues to remain bullish on the India story over the long term. "We have always said any peripheral market tremors causing India to go down would be buying opportunities. We stick to that."

Experts' view on stocks/sectors

On Tuesday, Infosys rose 2.9% and Tata Consultancy Services and Wipro climbed 1.4% and 2.5% respectively. However, Infosys is down 5.2% so far in 2010, while Wipro and TCS have lost nearly 4% and 2.1% respectively.

"In that sector, TCS continues to be our favourite," Betadpur said, adding that the IT sector would benefit from the dollar's near-term strengthening. Among the mid-cap stocks, he was positive on Subex . "It's reacting well to the increase in ownership by the promoters and that stock has corrected a bit. So now it's an attractive stock among the midcap IT players."

The new listing in the market, Jubilant FoodWorks , has seen a 65% rally in its first two days. Betadpur said the stock, even at issue price, was expensive and now even more so.

"There is a scarcity of listed domestic food consumption companies and investors believe in the growth story that the management has put forward," he said. "However, for the up-move in the stock price to sustain, the company now has to beat its own margin and revenue estimates. It is a tall order. So I would take profits, enjoy the gains and go eat pizza with that."

The most beaten-down sector in the recent correction remains real estate. In that, Betadpur said stocks like HDIL and Unitech had retraced to levels where they could be looked at again.

Over the long term, infrastructure is a positive long-term story, said Jitendra Sriram of HSBC. "Infrastructure is a sector that would be a multi-year story in India given the fact we need so much of it over the next four-five years."

Sriram, however, said he was underweight on commodity-related stocks. "Concerns over dollar strength and monetary policy tightening in China don't make for a bull case for commodities in the near term," he said. "As and when, we think that the bulk of the correction is behind us and probably the dollar strength has probably run its course, we would re-evaluate that space."

- With inputs from agencies