ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Gammon India BSE | NSE 25/05/12 Are Mutual Funds betting on Gammon India? Other Stocks in this news IVRCL | Jaiprakash Associates | Larsen and Toubro | Maruti Suzuki India | Mahanagar Telephone Nigam | NTPC | Punj Lloyd | Reliance Industries |

Speaking to CNBC-TV18, Amit Dalal of Amit Nalin Securities said that the momentum in the market is very strong and the breadth is fine. He added that there is a lot of interest of the investor base. He added that banks are going to be one of the outperforming sectors on an earning growth basis. They will show higher growth than other sectors, which could be economy or infrastructure-related sectors

Excerpts from CNBC-TV18's exclusive interview with Amit Dalal:

 

Q: Would you be a buyer and believe that this rally has more leg to go on immediately?

 

A: The momentum of the market is very strong. Perhaps, the only stock that has not given us the price, which one would like to see in this current rally is Reliance . It should have been above Rs 3,000, whereas it is only at Rs 2,850. So, if that is considered, the rest of the market has participated, with even a stock like NTPC in a new range of Rs 280-281.

 

The momentum is very strong and the breadth is very fine. Even a sector, which was ignored for such a long time like paper has started participating. So, there is profound interest of the investor base and I do not think that is going to give away that easily.     

 

Q: The cement sector has been lying very low for a while. How would you react to this news?

 

A: There is just no way the government can nationalize cement companies in today's day and age. It is not a function of cartelisation or a function of shortage created by anybody. So, I do not know how somebody could make a statement like that, but I do not think it will ever happen.

 

In terms of cement as an industry, the expectations of cement were high. So, you had June-July-August, when the cement prices did not go up. The demand- supply mismatch, in most parts of India, is not that high except perhaps in the South.

 

But if the market has fallen in any share because of this news from the south, I would give no credence to that news at all.

 

Q: What would your take be on the banking space?

 

A: I will take the sector first. If one were to look at the next year and say that earnings are going to be perhaps a bit lower than what we have seen before, then banks are going to be one of the outperforming sectors on an earning growth basis. They will show you higher growth than what one will see in other sectors, which could be economy or infrastructure-related sectors.

 

It is good for banks that the global interest rates are going to fall. There is no way United States is going to be able to live with what is happening there without decreasing the rates in the next quarter. Perhaps, Mr. Reddy may see it fit to reduce our rates a little. So, that is a plus for banks.

 

If I had a defensive mode or if I had a mode where I want to take away from the momentum market and put more money into sectors, then PSU banks are definitely place to be in.

 

Q: The auto numbers and the two-wheeler numbers were downright disappointing. Some analysts were not very happy with the Maruti numbers, though they were clearly good. What do you make of that space and would it be sometime before you recommend a buy there?

 

A: Two-wheelers remain a concern and this is perhaps the irony of the current market. We started this huge rally with consumer spending going up. Even CVs are not showing us the growth that we would like to see, considering that we have high growth in the economy right now. So, that remains a concern and until we know another quarter, we will not be able to really judge why this is happening. But two-wheelers are not something I would look at right now.

 

Q: MTNL is a stock that did wonders in the past few days and we got talk about some land development coming out of Delhi today. Is that a stock you would keep on your radar?

 

A: That is the stock that worries me the most. Before a correction, MTNL goes up. I hope that this is not the case right now but MTNL is always the last one to perform. Unfortunately, there are no numbers on its business that are encouraging right now. Its services are not improving. On the contrary, as a consumer, I find its services really deteriorated. So, I am not really sure whether there is any upside, in terms of some land valuation, because they have lots of land and offices all over the place. But I am not a big fan of this stock.

 

Q: Are there any concerns on this blazing performance from the midcap space day after day?

 

A: The whole of the retail market is in and it wants to earn in every way or form, make money in one stock and go into the other stock. This is not something that lasts for long periods of time. We will definitely go higher from here, but I think we have reached areas of concern.

 

Q: There seems to be an incipient rally in the construction space. We did see good movement in HCC , Gammon and even Jaiprakash Associates . Is there anything in that space that you would still be a buyer in?

 

A: They are all expensive. I think IVRCL is perhaps still a good one to look at. I would look at some derivatives of that and own one of their company i.e  Hindustan Dorr-Oliver, which supplies for irrigation projects. So, that kind of a derivative story is perhaps something that one could look at.

 

That space is very exciting. In the next rally of the largecaps, I definitely see Larsen & Toubro and Punj Lloyd participating. 

 

Disclosure:

 

It is safe to assume that my clients and I may have an investment interest in the sectors discussed.