Strong Oct rally expected; Bet on SBI, Axis & L&T: Experts

"Even if the market does not hold, I suggested that there would be move towards consolidation and there wouldn’t be any corrections at all. But today’s market has indicated that it will not stay below 5,680 and will go lower. That does not change the forecast for October which suggests that the market should make an attempt to cross 5,800 or even 6,000. I expect a strong rally in October unless things change. The range then is somewhere between 5,550 and 6,000."

Market analyst Ambareesh Baliga adds that investors should be picky while choosing stocks and buy only on dips. Baliga's picks include SBI , Axis , L&T and BHEL . With USL 's stake-sale to Diageo to be finalised soon, the market analyst advises investors to hold on to the stock for the time-being.

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

Q: Where do you see the series expire this time around?

A: I have been bullish on the markets for while now. But since the markets moved up too soon, too fast, I think a mild correction is overdue. But this correction could be either downwards or sideways and because of this I feel that the expiry could be at the same levels of 5,650-5,700.

If you are talking about the next couple of weeks beyond October, I think we should see the markets settle closer at the 5,900-levels.

Q: Would it then be prudent to advocate a stock-picker strategy in this market considering that there has been such a strong run-up on the Nifty itself?

A: Absolutely. One should be looking at picking stocks and also buying only on dips. This will not be a one-way street. There will be some corrections in between and investors could utilise those corrections to buy in.

Q: What stocks are you looking at right now either from the beaten-down segments or the outperformers?

A: I don't think there are too many beaten-down segments especially after the rally in capital goods, infra, a few metal stocks, auto and banking. My picks again are from these sectors. I will look at buying into capital goods and infra and banking, but only on dips.

My picks would include SBI , Axis and L&T which has been my favourite for a while. Though the stock was at a new 52-week high, there could be a correction of Rs 50-60. However one should look at buying closer to Rs 30 levels. BHEL looks attractive closer to Rs 228-230 levels which it reached two days ago.

Q: Regarding BHEL , is there a fundamental trigger of any sort or is on a technical rebound from the Rs 197-level it reached in early September?

A: Fundamentally, the likelihood of debt-restructuring in the power sector and the expected improvement in the order-book could be the key triggers. Secondly, the share had a technical rebound as it recovered after falling to Rs 195-197 from Rs 230 in a very short time.