Prabhudas Lilladher sees Nifty at 5500, suggests stocks

The Sensex closed flat at 17,850.22, up 3.36 points or 0.02%. The Nifty ended at 5418.30, up 5.45 points or 0.10%.

In an interview to CNBC-TV18, Dilip Bhat, joint managing director of Prabhudas Lilladher says, he sees further downgrades in the corporate earnings. "I think that probably caps any reasonable upside from the current levels. So, 5,500 looks scalable, especially on the back of the fact that even US is eclipsing the previous tops," he adds.

According to him, the Indian market will be rangebound ahead. "In India, we still remain daunted by macro economic fundamentals. I think that will keep the market probably rangebound, at best, around 5,000-5,500 levels," he adds.

He is bullish on Ranbaxy , Axis Bank , ICICI Bank , Coal India , NMDC , Dr. Reddy’s , Cairn India , Infosys , HCL Tech , Polaris and Mphasis . According to him, these stocks can give good returns in the long-term.

Also read: Mkt to move to 5800 post small consolidation, says Nirmal Bang

Below is the edited transcript of his interview on CNBC-TV18.

Q: Do you see more upside in this run or do you think the market is pushing against the higher boundaries of its range?

A: I think the market really is hemmed in by two contradicting factors. One, the FII inflows are probably driving the market up. Even if you want to buy, what do you buy? Most of the valuations appear to be stretched out. The way the corporate earnings are growing, they are anemic. So, we are going to see further downgrades in the corporate earnings.

I think that probably caps any reasonable upside from the current levels. So, possibly 5,500 looks scalable, especially on the back of the fact that even US is eclipsing the previous tops. So, all those factors are possibly helping somewhere. But in India, we still remain daunted by macro economic fundamentals. I think that will keep the market probably rangebound, at best, around 5,000-5,500 levels.

Q: How much more of an upside do you see in Ranbaxy?

A: As far as Ranbaxy is concerned, we are taking a long-term call. In the short-term, all of us are aware that there is debt in the books, especially the FX, which is kind of an aberration. But our basic call is that the core profits of the company, which is about Rs 700 crore for December 2011, in probably next three years, will more than double, maybe go up to Rs 1,500-1,600 crore.

The first to file opportunity, which they have, excluding Lipitor because Lipitor itself must have generated about USD 600-700 million, we are still talking about north of USD 1 billion. So, all in all, in the next three years, the total cash in the books itself will be more than almost 50% of the current marketcap of the company. So, from hereon also, slightly on a 12-15 month basis, the stock has a potential to double from the current levels.