Left out of the rally? You can still bet on 3 sectors!

Excerpts from Closing Bell 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

The market has witnessed a spectacular rally today. The Nifty has crossed the level of 5,500 and ended at a three-and-a-half months high.

Sanjay Sinha, founder of Citrus Advisors believes that banking, infrastructure and auto stocks have some more steam left. "If you want to play an aggressive strategy, it makes sense for you to participate in these three sectors even now," he adds.

On the market as a whole, Sinha says, the stage is now set for some profit booking. According to him, the market may see any level between 5,200 and 5,300. "That should be fairly comfortable levels for people to enter," he said in an interview to CNBC-TV18.

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Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompany video.

Q: What does the investor, who has been left out, do now in the market? Is there still a good time to invest into the stocks that have good valuations or do you think they have missed the bus?

A: If you look at the market, in terms of the current visibility of valuations, the market is expensive. Going forward, what we might have in 2012 is that the market might rally ahead and the earnings revision will come probably after that.

Given the fact that the rally has been so strong, there will be a very strong temptation for market participants, who have entered in early, to cash in some of the profits that they already have with them. Therefore, given the momentum that we have seen in the market, I do not rule out the possibility that we may probably go a little beyond where we are today, but the stage is now set for some profit booking.

Investors, who would like to participate in the market, I think they will get another opportunity to participate in the market. But my call is you should not focus only on the short-term opportunity of the market now. We are emerging out from a fairly prolonged period of bearish sentiment that has been in the market. This sentiment is going to stay with us for quite sometime in 2012. Investor should participate in that rally as and when it is unfolding before us.

Q: For someone who is waiting to deploy some cash and is worried about the risk of putting in at 5,500-5,600, what kind of retracement in stock prices, if not the index, would you recommend putting in some money?

A: Given the fact that the rally has been so strong, some retracement cannot be ruled out. So, if you want the comfort of deployment to make some returns in the short-term, just to build the conviction in the market, I think that opportunity will come. I think the market may see any level between 5,300-5,200. That should be fairly comfortable levels for people to enter.

Q: If you are willing to digest little bit of losses from here, but you are still willing to put in money, which is the lucrative space that you are looking at right now? Where is the potential much now?

A: Given the background of pessimism that has afflicted banking, infrastructure and auto stocks, I think the pessimism has not totally been corrected even with this rally. I believe that these three sectors have some more steam left. Therefore, if you want to play an aggressive strategy, it makes sense for you to participate in these three sectors even now.

Q: Would you buy the power space at this point, expecting a lot of the issues to be resolved?

A: I would buy power maybe as a subset of the entire infrastructure space, not necessarily just because of this particular event as a factor. There are few challenges for the power sector in India. The fuel supply agreement with Coal India may not necessarily address the entire need for resources that they have. Till the time they actually tie-up their contracts with not only Coal India, but with some of the global suppliers also, the issue will not be fully addressed.

At the same time, I am slightly optimistic on the resources front also. In a year in which the global economy is slowing down, I would expect that the mineral resources, prices also may not be the same hike as what they have seen in 2010-2011. Therefore, access to resources at more affordable prices may still be available to the power companies.