Prime Sec cautiously bullish on mkt, bets on offshore stcks

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Prime Sec cautiously bullish on mkt, bets on offshore stcks

N Jayakumar of Prime Securities is cautiously bullish on markets for 2011. In an interview to CNBC-TV18, he said that Nifty may test 7200 mark by Diwali and could end 2011 at 6800-6900.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS 2011 likely to be a steady year, Mkts may gain 15-20%: UBS Markets may see new highs in 2011 Equity mkt to be more volatile in 2011 than 2010: ICICI Pru 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

N Jayakumar of Prime Securities is cautiously bullish on markets for 2011. In an interview to CNBC-TV18, he said that Nifty may test 7,200 mark by Diwali and could end 2011 at 6,800-6,900.

He is concerned that move towards new high won't be strong and Nifty could test 5,400 in worst case scenario.

According to him, there are lot of value in midcaps compared to large caps sector. He is bullish on softer commodities. Jayakumar is betting on Shree Renuka , Core Projects and Everonn .

Maintaining an extremely bullish outlook on offshore space, he is positive on Aban Offshore , Pipavav and ABG Shipyard . Among the real estate stocks, Jayakumar is bullish on Orbit Corp . " Rel Infra may rally towards Rs 1,050-1,100 mark," he noted.

As a strategy, he prefers L&T over SBI and Tata Motors .

Here is the verbatim transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying videos.

Q: Are you feeling bullish or cautiously conservatively bullish for 2011?

A: A very Happy New Year to everyone. I think one is feeling bullish cautiously. I stay cautious because suddenly one week all headwinds seem to disappear and another week headwind seem to come back. But I think the way I see this that 5,750-5,800 will act as an extremely strong base.

My own thought for the year is that if an extremely negative event were to take over the markets, we could test 5,400. But otherwise we will probably do another grinding kind of slow upward movement through the year. That is the view that I have.

So, it may not be very different from the first six months of what 2010 was where the markets kept moving up much against the wishes of people. My own sense is that we are going to have a grinding kind of a movement rather than a quick dash beyond 6,300-6,400.

Q: So, 18-20% by the time the year is done or will the grind have more traction on the upside?

A: I think from current levels we could, my own thought process is that, once the 6300 gets taken out convincingly, inevitably our markets have always maintained this move in a band of 900 as it were 6,300-7,200 will be the new range. We could test 7,200 sometime in the course of the year, probably closer to Diwali. And then maybe we end the year around 6,800-6,900. That is the kind of feeling one is getting.

One of the principle reasons is that in terms of big positive surprises or big negative surprises a lot of that has actually got eliminated. Unless there are serious dislocations in either the commodity space or dislocations in terms of money markets worldwide, I feel a grinding move is probably more the order of the day. Volatility regardless of what people are expecting, I think will be on the lower side for much of the year.

Q: Where does that leave midcaps? Do you think it is a rear where midcaps will be the place to hunt for value or do you think that played out already in 2010?

A: I do not think so. I think it played out in 2010 and just about when the world seem to want to jump into midcaps, you had a complete collapse for one reason or the other in the last quarter of the calendar year. I think that is where as they say angles are fearing to trade and that is where one should go out and venture and put ones money and ones mouth in the midcap space.

We have been a bottoms up kind of broking house. That is the orientation that I personally have. I think one would tend to look at a lot of value in the midcap space, especially because people feel that it is time to just stay in the front liners. The fact of the matter is very-very few front liners have actually contributed to this kind of a rally.