Nifty strong support at 5630; surprise rally possible: Dutt

"We may go down below 5630 but I think that will be very briefly for a day max or may be even not that. My view is probability of breaking 5630 is just about 20% odd in the next fortnight or so," he told CNBC-TV18 in an interview.

The government's slew of big ticket reforms this month, including a hike in diesel prices, has sparked a rally in Indian stocks.

He says the market is defying scepticism about the lack of execution, adding policy action and Reserve Bank easing will be key triggers for the market. Dutt expects the RBI to cut rates by up to 50 bps on October 31. "The RBI is likely to work closely with the government to ensure growth revives," he said.

Dutt says stocks with corporate governance issues may underperform going forward. He sees improvement in newsflow on fuel and pricing of power. "We also see potential for upmove in media distribution companies," he said adding, "turning optimistic on the power sector". 

Also read: See Nifty at 6200 by March; more upside in infra: CIMB

Below is the edited transcript of Dutt's interview with CNBC-TV18

Q: We speak in better circumstances today than we have for the last one year. Are you still bullish or are you too cautious for just the near term?

A: What we have seen is a classic consolidation phase where the gains are being absorbed, where we are seeing rotation into areas where there has been underperformance. It can be starkly noted in some of the midcap stocks, while the large cap stocks run up substantially. We touched 5750 odd levels and now we have retraced back to that 5650-5700 range.

This consolidation level is a way of basically correction in a bull market. We may go down below 5630 but I think that will be very briefly. It could be for a day max or may be even not that. So, in my view the probability of breaking 5630 is just about 20% odd in the next fortnight or so.

Q: In the last couple of months of this year, you see a 6000 or more as a distinct possibility?

A: Yes definitely. Infact we would be seeing those levels sooner than most of us expect. Markets tend to move in directions where we all don’t expect. I think the market is going to surprise all the skeptics and the bearish people because everything around us in India is bearish whether it’s the political spectrum or  policy framework. In the last four weeks people are saying that everything has come to a standstill. There have been giant announcements but no execution, so skeptics are back again and I think the markets will defy the skeptics once again.