Midcap IT stocks alive; October full of promise: Experts

"Yes, it is still a no-trade zone. Today is the third consecutive day when the markets are locked in that narrow 50-point range. And This is what I has suggested on Monday. The market moving by five-to-ten points does not provide for any pecuniary gains. So it is wise to stay away from the Nifty. However midcap IT stocks have begun to emit sparks of interest. So, stocks like Polaris are suggesting that perhaps a deep correction in getting over."

PN Vijay of askpnvijay.com adds there is little room for pessimism for the October series as the expectation on the announcement of further reforms by the government is high and the Indian markets have underperformed the global markets by rising 6 percent while other markets have been up 13-14 percent.

Below is an edited transcript of Vijay's analysis on CNBC-TV18.

Q: Now many global policymakers are talking about how QE3 or the latest round of quantitative easing may not spur growth going ahead and there could be an over-bought situation leading to a sell-off in global markets. Is that something that you expect through the course of the year?

A: I do not think so. The general feeling in Europe is that quantitative easing would support the Italian and Spanish bond markets. It is not expected to improve liquidity with consumers. It is more of restructuring of sovereign balance-sheets which is very positive for economies and for stock markets.

As far as QE3 is concerned, the general opinion is that the impact would be very limited as proved by the lack of a huge run-up in oil prices after QE3 was announced. But I think the global markets have not rated it too positively or are too gung-ho on liquidity.

They have been quite positive because the ECB standby funding which has been put through. So I do not think it's a great fear. And I do not also feel that India will have to run along with global markets, because India could be a perfect contrarian play.

Strangely, an overdose of liquidity in global markets is not good for India because that would push commodity prices could go up and our problem is high commodity prices. So the Indian stock market essentially, depends on the domestic reforms that have been announced and others possibly on the anvil.

Q: What is the sense now about the next phase of reforms? Secondly, what is the word now on the Cabinet reshuffle, is that likely to have any kind of market impact?

A: Regarding the reforms, there is an immense feeling of relief that the political fall-out has been contained. In-between it looked as if a strong coalition against these measures was building up. But the UPA and the Congress in particular, got away with the gamble. So much of reform in FDI and in petro-product prices in such a few days was quite lot.

And then the government announced reforms totally overhauling the power sector which implies higher power tariffs and improving the finances of the state electricity boards, which apart from GST, is one of the biggest domestic reforms one could talk about. So the pace is on in reforms and next reform could be the allowing of FDI in insurance.