Find out: 2 largcaps, 3 midcaps that Sharekhan is +ve on

In an interview to CNBC-TV18, Jani said the markets are likely to surge in January. He suggested buying on corrections.

 He is bullish on Infosys and TCS . “For 10-15% upside, I think Infosys and TCS both are looking very interesting.”

In the midcap space, he likes Eros International , ISMT and Strides Arcolab .

Here is the verbatim transcript of his interview with CNBC-TV18's Latha Venkatesh. Also watch the accompanying video.

Q: Should we now get used to the fact that the best is over and the markets are going to start to see sliding? There are some who bring some macroeconomic argument into this by saying that the US recovery is showing some incipient signs, so perhaps big money is not going to flow the way it flowed, when the US was much more weak.

A: We think that people have been a little cautious for the past one month. But overall we think that the markets look quite strong, particularly global markets have been stable for the last one month or so. We think that though in terms of tightening, you could see some developments, on a broader level, we don’t see much of a problem with the market. We think that if there is a minor correction, it is a good opportunity to get into the market.

Q: You still think that January can lead us higher, is there a trading gain even on the Nifty in the next quarter?

A: Definitely, I think so. One will have to be a little selective in terms of sectors and stocks because we think that there might be some pressures on the sectors because of the input cost going up, they may not report great set of numbers and valuations may not be favourable. But I am sure that there are opportunities in various sectors from even trading perspective.

Q: At the moment, the one that is looking reasonably okay is the technology sector, so is that a trading gain you are talking about?

A: Absolutely, we think that in an environment where we are seeing the commodity prices moving up, this is one sector where people would find comfort, even from a rupee perspective that looks pretty good.

We think that both Infosys and TCS in particular will report good, strong set of numbers and there is under-ownership. So, for 10-15% upside, I think Infosys and TCS both are looking very interesting.

Q: Midcap space, some bargains are available now, what will you pick from the rubble?

A: Midcaps have corrected 30-40%. We think what is important is to find out the right ones where the broad fundamental story is intact, corporate governance is not compromised. From that perspective, two-three stocks that we like at this point of time are Eros International, ISMT and Strides Arcolab.

We like the business model of Eros international and even in a challenging environment the company has been able to report very strong 30-35% kind of a growth. It’s able to pre-sell its rights in the overseas market, music rights so it’s a very stable business model and the recent release, ‘No Problem’, has collected almost Rs 30 crore which is a big positive trigger for the stock. So, this is something that we like for 30% upside.

ISMT is an interesting play. They make steel tubes. Because of the capacity expansion and the new power unit, which is going to come up, there is going to be a huge cost saving and the company is available at about 4.5 times FY012 earnings and most of the user industries are doing extremely well. So that is something that we like.

The last one in the midcap space that we like is Strides Arcolab because of strong business model focusing on the sterile segment, strong ANDA pipeline and its ability to garner good deals with pharma majors like Pfizer, Glaxo etc. We think these are the interesting midcap stocks to look at.

Q: What kind of price targets are you looking at in Strides Arcolab?

A: We are looking at about 35-40% upside from current levels for Stride Arcolab. The company is available at almost about 8.5 times ‘11 PE and 30% growth is what we are looking at.

Disclosure: It would be safe to presume that I personally and my company have an interest in the stocks that I have talked about.