Clueless mkt to stagnate at 5550-5600 levels: Anand Rathi

Excerpts from Bazaar on CNBC-TV18 Watch the full show » 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

Q: Would you be concerned about the way Hero Honda is shaping up, because of all the talk about Honda exiting or does this look like a good point to enter into the stock?

A: We continue to like Bajaj Auto over Hero Honda even at the current valuations because their models are doing a little better. The grassroot level reality is that Bajaj Auto should probably in the short run perform better than Hero Honda.

Q: There has been lot of excitement in the auto ancillary space, anything that you track and like there?

A: We like Rico Auto and we have liked Exide for sometime now.

Q: Does the sugar cycle interest you now and would you be wary of the kind of spikes that many of these sugar stocks have seen?

A: Sugar is one sector where the price is very sensitive to inflation figures. The stocks are not free to perform in the manner. The pricing is not free. There is a lot of government intervention. Even if the stocks do appear to look cheap one is never very certain till the level of pricing power that they will have going forward. We would continue to bet on some of the sectors which are not so price sensitive.

Q: How would you approach the entire commodity space now and also the natural resource names like Gujarat NRE Coke , Sesa Goa , and National Mining Development Corporation ( NMDC )?

A: Commodities, metals per se, we continue to hold a view that there would be better opportunities to get in. You could still see some kind of a selloff. We are not very certain of what is going to be happening in China and the US. They are affected by international pressures more then only domestic pressures so one would assume that you will get better entry points. We could enter these levels for pullbacks at lower levels. I would be very uncomfortable buying any of these stocks on pullbacks and momentum.

Q: What about telecom? We have seen sings of life in Bharti Airtel off late. What is your trade there?

A: We continue to maintain a long on Bharti. We have always talked about it for a long time and we continue to believe that this is one sector which has been beaten out of shape although the returns would be back ended but one would assume that it's a good investment for one year time perspective.

Q: Can you comment on HDFC ? There have been a slew of downgrades that have come in for that one because of rising interest rates, competitive intensity etc. Would you be circumspect on that stock from hereon?

A: No, you will see price moves going both ways. Downgrades and upgrades keep coming but that's a stock that should continue to perform pretty well going forward.

Q: What about a space like aviation? Do you keep an eye on that?

A: Yes, we had looked at it sometime back but it seems to me that prices have run-up considerably now. The load factors have gone up, there is going to be consolidation, they are all doing well but I would be scared of entering such sectors at these levels at least.

Q: Your thoughts on cement space, that has been seeing some bit of pressure off late. What would you do now with that?

A: We do like the cement sector, but I must add here that the returns are again, you probably will have to wait for about three-four quarters. Everybody believes there is a big supply overhang and fresh capacities are coming up, especially in the South, but our belief is that demand will ultimately catch-up. There could be value in some of these stocks. We would continue to say that once there is a minor correction, buy all these stocks on dips for probably a year- year-and-a-half timeframe.

Q: How should one approach the midcap space right now? Are you apprehensive that there will be a global correction and midcaps, which have gained quite a bit, will give up some part of their marketcap or is it prudent to still run with a portfolio of midcaps versus the market?

A: You necessarily have to be invested in midcaps for outperformance, they have outperformed. I would believe that wherever there is clear visibility of earnings and there is adequate liquidity, there is no harm being in this space at all.

Q: Would any of the global turbulence have an impact on the IT sector? Would that be a space that you would be little circumspect about?

A: We believe that valuations may become a concern, but our IT services companies have shown time and again that they can cope up with this very well. So, while valuations are a concern and upsides may not be plenty on the onsite, one would have to bet that there should be no reason to worry.

Q: Could you think of a contrarian call on Suzlon from these levels, sub-Rs 50 or better to let it be?

A: I have been answering this question very often, the stock was up on some rumours yesterday of stake buy by a very major company and the stock falls all the way back. I think I would wait for some ground level changes before we turn into buyers on this stock.