Markets may move higher by year-end: Motilal Oswal

The markets have been witnessing a string of flattish sessions since the beginning of this week, which, experts say would wade off in a few weeks giving way to a large directional swing in either direction.

The markets are likely to move higher by the end of this year, said, Rajat Rajgarhia, Head of Research at Motilal Oswal Securities, on the sidelines of their conference in the US. “The floor for S&P Nifty of the Nation Stock Exchange may be at 4,600-4,700, which will chiefly be triggered by earnings and borrowings,” he said adding, the near term moves would be decided by global factors.

Valuations, according to him, would be attractive post consolidation.

Here is a verbatim transcript of Rajat Rajgarhia’s interview on CNBC-TV18. Also watch the accompanying video.

Q: What is the mood there, we have had a bounce back post the Budget, is the mood still optimistic from people that you are meeting at the conference?

A: I think investor sentiment is very positive. While the Budget has provided a new catalyst for investors to increase their allocation, in the conference we are seeing investors being positive on a number of sectors. The positive mood of 2009 is sustaining in 2010 as well. That's the overall impression we are getting from all the investors here at the conference.

Q: Is it looking like the big breakout? How high would you say the chances are that we can take out 5,300 this time?

A: Most of the investors are viewing this period of consolidation as an important phase because after an 80% move in the index last year, we are seeing the markets unchanged for the last six months. I think it’s good because people think it will make valuations more attractive rather than the markets touching new high in a hurry and then again looking for a correction. So this period of consolidation will ensure that let the events play out, Budget go through, some of the reforms happen, earnings growth return back and then the markets can keep on climbing higher. But I think most of the people are betting for the markets to move higher at the end of the year, than what we are trading now.

Q: Conversely, would you say there is conviction that we have set strong floor for ourselves and the market may not look to break that 4,600 mark after what’s happened in the Budget?

A: I would bet on that and that’s the impression we are getting here. A lot of these moves in the near term will be driven by global markets. I am surprised to see that people here in the US, are positive on US markets in 2010. So if the US markets remain good, if the Budget turns out to be the way it was announced, the borrowing number remains low, corporate earnings come back, then 4,600-4,700 floor should be good for the markets, by the end of the year we should be higher from where we are now.