Expect consolidation as Sensex nears 13k: Choksey

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Deven Choksey of KR Choksey Securities feels that the markets have been flat over the last few sessions due to profit booking taking place, ahead of announcement of results.

 

He says that there is no change in the fundamentals of the markets, if anything its only getting better.

 

Moving forward, he expects a bit more profit taking and consolidation to take place in the market, as the Sensex prepares to enter the new 13000 level circuit.

 

Excerpts from CNBC-TV18's exclusive interview with Deven Choksey:

Q: The markets have had two flat days, what is your sense of where the market will finally move from here after this consolidation?

A: I think the last two days were flat because of profit taking. At the same time, some people have exited the profit positions ahead of announcement of results, which is very typical to the result season. So in my viewpoint, if I am looking at it, there are no changes in the fundamentals. On the contrary, they appear much more clear and better, as we progress with the result season. For the second half, the directional calls are quite positive.

So at this point of time, I see more of profit booking, consolidation in the market. It is trying to prepare itself to get in a newer orbit, which is 13,000 plus levels. There is no denying of the fact that the valuations are not as attractive as they used to be at some point of time. But at the same time, selective merits are definitely likely to take the market up on individual stock performance basis.

Deven Choksey on stocks and sectors to buy and sell today:

Sugar - Positive

Most probably, raw sugar prices in the world markets have bottomed out. Sooner rather than later, the government should allow export, which should augur well for the increased capacity, which most companies have already built in. Another important aspect is ethanol, the clarity on the pricing for which, is also expected to come in.

All put together, sugar stocks have consolidated a lot after its fantastic rally. Probably if stock prices are looking attractive at this level, which they are, my view point would be that sugar companies are once again in for a fresh rally. They are looking good for investment as well.

We have always maintained that the long-term prospects are good, maybe in the shorter-term they have corrected. But once again it looks like there will be improvement in stock prices. 

FIEM Industries - Skeptical

From the industry space point of view, we like FIEM Industries . Maybe some more management interaction is required to clearly understand their road path ahead. But at the same time, the business model looks interesting.

We have not taken a clear view on the working of the company since we have not interacted with the management. But we like this particular space and feel that this company has better scope.

We need to first establish how best the management could take this company forward, and then probably take a call on this company. But nonetheless, if it has gone below the issue price I think one should start looking at it, atleast from the point of view of looking at the merits on the investment of this company. 

Steel - Positive

Topline steel companies are available at good valuations, and so one might as well stay focussed on them. The Corus bid for Tisco is being refered to as a bit negative. In the interim period it might be a little bit heavy on the finances of the company, but in the longer run it makes good strategic sense. At this point of time, I would stay with largecap companies in the steel sector.

Disclosures:

We have investments in sugar companies as well as Tata Steel .