Changes in govt may strengthen mkt in near term: PL

Looking at the start of the EU summit on Thursday, the market remained range bound on Wednesday. The Nifty is moving around the 5150 mark and the Indian market is yet to correct on the back of expectation from the summit. For the second consecutive session, the 50 share NSE Nifty remained in a consolidation phase.

Ahead of the June expiry on Thursday, the BSE benchmark gained as much as 123 points intraday, before closing at 16,967.76, up 61.18 points. Meanwhile, the NSE benchmark went up 21.10 points to 5,141.90.
Riding on hopes of progress from reforms and policy action in the near term, the market could see some strength, feel experts. Amisha Vora, Joint Managing Director of Prabhudas Lilladher is of the view that the market should be little more positive from here on, though it would to some extent also depend on how the monsoon pans out. She also said there would be some hope building about the change in a key position in the government, provided the attention is back to administration and policymaking.
In these market conditions, Sudarshan Sukhani of s2analytics.com feels that Tata Motors is probably bottoming out and he holds a range of Rs 210-215 for the stock. As far as JP Associates is concerned, he believes it is an excellent time to buy this share. Although, it will not make a lot of money quickly, in two or three years time, it could be quite good. Sukhani is long on Kotak Bank and taking stock of the market, he advises investors to sell metal stocks at the moment. Below is the edited transcript of the interview on CNBC-TV18. Also watch the accompanying video. Q: Give and take everything I think anyone would have taken this expiry at 5,150 level, we have rallied about 4.5% this series and we had so many cues stacked up, the RBI and the Fed policy, our own issue as well, the Greek elections etc and it worked well in our favour. Do you think this the market will be more constructive from hereon?
A: It looks like that in the first two weeks or so, it should be little more positive from here. Though it will be beyond that, to some extent it also depends on how the monsoon pans out and it doesn't disappoint us too much.
But, otherwise there will be some hope building about the change in a key position in the government and few things coming by, provided the attention is back to administration and policymaking and not just politics. Some hope will remain and I think because of that the markets will continue to gain little strength from hereon. Q: The next trigger for us is the earning season, which are the sectors that you would be most wary about, where are you expecting a bit of disappointment this time around and which are the sectors that you think will deliver positive earnings this time?
A: We have been talking to a lot of banks and some of the corporates, I think the huge pressure which was there in terms of slippage in this quarter, could be little less compared to what the flow had been in the last two quarters. NIM should also be okay to steady. So the banks will show reasonably okay performance in terms of what it used to be in the last two-three quarters.
But in terms of disappointment, I think auto will suffer a bit, both in terms of demand and possibly in terms of margin. Telecom could also disappoint because quite a few of them will have a lot of mark-to-market problems. So, probably the weak spot would be auto and telecom. It will continue to be softer but  I don't think there would be any substantial negative there. Q: Within pharmaceuticals, midcap IT and gold loan companies, if you had to identify any stocks that one could pickup with an investment perspective in mind, which one would it be?
A: We are bullish on Ranbaxy within pharma. We think, post the resolving of the problems they have been facing with the US FDA for the last three years, they will go places with a strong parent, extremely strong first to file pipeline.
Domestically also gradually, their portfolio is shifting to a better product mix. All these three augur well for Ranbaxy and from an investment perspective, we think that this is a good turnaround story and one should aggressively look at it. Q: If you do believe that there is a bit of upside in the near-term for the next couple of weeks or so, pending clarity on the monsoon, what is the extent of the upside you think for the Nifty?
A: I think it will get capped around 5,250-5,350 range and beyond that once again one needs to probably see how rain favours us. But to that extent, it looks possible to me. I think that some of the low hanging fruits, whether it is or not has to be seen. In terms of policy action at least, it should start. Q: You were talking about banks but which stocks would you pick up because as early as this morning, two separate brokerages, Morgan Stanley on SBI and Goldman Sachs on Kotak Mahindra Bank have cited pressures like asset quality and lower margins persisting for a couple of quarters now. Which banking stocks would you pick up from hereon?
A: We have amongst our top picks, ICICI Bank and amongst the slightly smaller one, we like Yes Bank and in the PSU side, despite the asset quality problems, we like SBI and Union Bank. But, I will just come back to one more point on markets, about the factors that can aid the rally.
I think that the combination is such that in terms of whatever macro numbers we are seeing, it is very pathetic all around. Along with this, most of the pain is not being taken by the indices, it is being taken by the rupee. So in rupee, in dollar terms, markets are looking much more attractive and also the shares, which are asset heavy. So I think that in all probability, the rupee should also appreciate and so should the markets. That looks a reasonably good possibility. Q: Would you buy Tata Motors at Rs 238 or best to wait it out a bit?
A: I think I would wait it out a bit since it has started showing a bit of correction. There is some news coming about further slowing down, particularly the state level purchase from China and some of their products.
But, I do believe that this will be the range where the stock would remain for a while, say Rs 220-240 or so and consolidate. But below that, the chances are limited and I think this could be a very good accumulation level too, the range of Rs 220-240. Q: If we are expecting to see some oil reforms very soon, either in the form of tweaking of any duties or even hiking of diesel prices, ahead of that which oil and gas stocks would you bet on for the medium-term or even for the shorter term?
A: If we are generally looking at it, there are no such oil marketing company as one of our top pick. But, if required to be chosen, then we are more comfortable with BPCL and other than that, we are more comfortable with Petronet LNG. Q: How will you approach something like Coal India from hereon because it has been in a steady state ever since the FSA issues have been resolved, you expect more there?
A: I think so. We continue to remain bullish on that. I do agree, this is a kind of defensive but, it is going to do better in the next two years or compared to last two years. That is what our assessment is. We think that in terms of volumes, they should do better over the next two years.
The kind of uncertainty regarding their wage hike or some of the other issues are probably behind us. We also understand that the new chairman is supposed to be pretty aggressive and very committed and it makes a big difference in PSUs. So we continue to remain pretty bullish on Coal India. Q: You were telling us about the upside in the market and how it could be restricted to that 5,250 to 5,350 level. What should your strategy be, would you lap up on some of these high beta names of infrastructure and banking or would you still continue to be defensive and hold on to pharmaceuticals or even IT?
A: We are not so bullish though on IT but, we are bullish on pharmaceuticals. But if the rally has to materialize, it probably will be having two legs. One is a small bit upwards in terms of policy decision and second, some tom-toming or actual action in terms of power, capital goods and infrastructure sector. I think these two would be the legs which will help in the rally, if that materializes.