Mkts to rise 20% in 2010: Satish Betadpur

Excerpts from Closing Bell on CNBC-TV18 Watch the full show » RELATED NEWS Day 1, 2010: Sensex ends higher, volumes disappoint Expect a meaningful move in January: Udayan Nifty BSE | NSE 29/05/12 Are Mutual Funds betting on Nifty?

The markets have begun 2010 on a muted note. The Sensex crossed the 17,500 level to close higher at 17,558, up 93 points, while the Nifty maintained the 5,200 level, closing 31 points higher at 5,232.  So, where are markets headed in the new year and where should you invest your money?

Satish Betadpur, CFA, Global Research Director, Independent International Investment Research PLC, says the market is waiting to see which sectors could outperform in Q3 earnings. "That will drive the market in the near-term. For 2010 as a whole, we expect 20% earnings growth. We expect the markets to move up by that much."

However, he was quick to add that there are concerns about banking sector earnings, which could cause the markets some hiccups. "Sectors where input costs form a big part of earnings are another concern. We have seen input costs go up and that may cause a margin squeeze."

Jagdish Malkani, Country Head, Taib India, is a bit circumspect. "A halt in liquidity flows, which is the heart of this whole market bullishness, and any untoward movement in the dollar could play spoilsport. The first 15-20 days of January are bullish. There is no reason why that should not continue. Going ahead, the road is mucky. Overall, I am not so hot on 2010. It is going to be a much more challenging year."

Fertilisers: Further boost needed
Technical Analyst Ashwani Gujral sees fertiliser stocks trading rangebound. "This move should be seen in the context to the budget. Chambal Fertilisers still needs to move above Rs 62 to get to levels of Rs 73-74.  Nagarjuna Fertilisers has taken a long time to move from Rs 34 to about Rs 36-37. They would need more momentum to really go further than this."

Cautious on midcap IT:
Betadpur is a little concerned about jumping into midcap IT at this point. "Though we like Subex and NIIT Tech, we are a little cautious on all these midcaps because these sudden 5-10-20% moves indicates a kind of market peak. I would wait for these stocks to subside before jumping in. IT is benefiting maybe a bit from the fact that the dollar is now showing strength and the fact that the dollar carry trade may be off in the near-term. A push from the dollar side could also help these midcap IT stocks."

Buy steel:
Gujral is bullish on steel stock. "Steel is looking much stronger than aluminium and copper. On declines, one should get into these companies. Once SAIL got past Rs 200-210 it found a lot of momentum. It could see levels of Rs 265-270. Tata Steel could see levels of Rs 665-700. Bhushan Steel has consolidated at about Rs 1,350-1,400. It could move higher to Rs 1,600-1,650."