Mayawati magic: Nifty gets boost, experts now eye 6000-6100

The Bahujan Samaj Party will support the government in the retail FDI vote in the Rajya Sabha. This will give the government a majority and the UPA is set to win the vote.

It came a day after the BSP abstained from the vote in the Lok Sabha. Addressing the upper house on the first day of the retail FDI debate, the BSP chief Mayawati said that retail FDI may not be good for the country and that the party wants to see impact of FDI in states who will implement it. The Indian market cheered the news from Parliament and closed at a 20-month high. The Nifty ended at 5,930, up 30 points or 0.52%. The Sensex shut shop at 19,486, up 95 points or 0.49%. In an interview to CNBC-TV18, Amisha Vora, joint managing director at Prabhudas Lilladher said FDI in retail is pretty positive; a major milestone is being achieved. "It will have its own economic repercussions on India. But it will give a lot of courage to government to go ahead quicker, maybe during the session or post session, with a lot of things, which are still incomplete, to revive the economy back into action," she elaborated. According to Vora, 6,050-6,100 on the Nifty is a possibility. "There could be a small correction in between. US decision will remain one of the critical factors to decide the market direction as well as momentum," she added. Pramod Gubbi, Ambit Cap said, over the last few days, the market was closely watching what was happening in Parliament. "It was, in some way, anticipating a positive result. Clearly, it has come through. With the passing of this bill, I guess we would see some activity, other bills being tabled and likely to be passed in the rest of the winter session of Parliament. I think the global liquidity is also adding to the rally," he explained. Gubbi further said that there is going to be a shift towards high-beta. "We are at a stage where we desperately need an investment cycle to go on. Largely investment growth has been held back because of lack of capital. For the first time, we are seeing a pretty frenzied activity in primary issuances. There are a whole host of companies on the road trying to raise money via qualified institutional placement (QIP). So, a lot of capital is coming into the balance sheets of the company. It is quite crucial because this is going to have a real impact on the economy. Our sense is that there will have to be a shift towards infrastructure, real estate, construction, capital goods. So, high-beta is clearly going to be the flavour of the month," he added. Meanwhile, Sudarshan Sukhani, s2analytics.com said the choppiness is killing. "We just step aside and wait for the market to become stable again. We have news tomorrow. So, there is no sense in staying in this market. Position traders have nothing to worry, their stop loss is 5,800. The Nifty is well above it. So, they have to accept the random movements of the market and stay long," he asserted. Espirito`s 7 silver bullet buys & sells: Check them out Below is the edited transcript of Amisha Vora’s interview on CNBC-TV18. Q: What is your take from what Mayawati said? A: Sailing through the vote on FDI in Rajya Sabha was a must for Congress. Some of the earlier actions also suggested that she was not opposing FDI much, but rather opposing BJP. Today’s clarity gives all the more reason to cheer that it should go through in Rajya Sabha. It is pretty positive, a major milestone is being achieved. It will have its own economic repercussions on India. But it will give a lot of courage to government to go ahead quicker, maybe during the session or post session, with a lot of things, which are still incomplete, to revive the economy back into action. _PAGEBREAK_ Q: There is a bit of a muted reaction seen in retail stocks. Do you still see steam left in retail stories on the back of FDI or probably the game is done there? A: FDI in retail is more a Congress victory, giving them a lot more confidence. But as we all know the state wide clearing and then the action in turn will have its own time and maybe some hurdles on the way. So, one round of quick gain, which was to happen in some of these stocks, has happened. It will consolidate. Over a period of time the rally will continue, but it will not be very quick and immediate. I think the first round is, to some extent, happened. Q: What do you see in terms of levels for the Nifty going into December, possibly at the end of December? Do you think 6,000-6,100 is easily achievable? A: I think 6,050-6,100 is a possibility. There could be a small correction in between. US decision will remain one of the critical factors to decide the market direction as well as momentum, but this is a possibility. Q: If the RBI as well cuts rate in January then where do you see the market headed? How much of a trigger and impetus will that be? A: Sometime, at the beginning last year, the rally started with the fact that India was amongst the very few markets where the interest rates were so high and the demand was artificially curtailed. This year will be the year where rates will be cut. So, now we are in December and more or less that hope has not fructified. Going forward, I think that RBI may take a small action in January, but it will be longer term where RBI will be able to act. I think inflation number, in November-December, will still remain upwards of 7-7.25 percent in terms of inflation. The only respite will be that manufacturing inflation will look much more sober. That may help RBI take a small re-looking at the rates and gradually they will go on that path. So, I think that will be affected, but the critical factors that the market would be looking at will be how, with action, the government is trying to revive the whole fuel, power, coal issue. That is very much in the agenda of the government. A resolution of that will kick-start in a big way and it will have a multiplier impact. The big game changer still will be the GST coming in. So, those two can definitely then take market to a newer level. We would be watching that. Q: Do you expect retail interest to start returning into the market now? A: I think the market move has been pretty good, no doubt about it. But retail would like to still see this sustaining for a while. In case it sustains for the next full quarter then probably I think that there could be some interest returning. Some of the initial public offers (IPOs) are well-priced. People make money in that. That could really bring retail back into market because up till now the other two asset classes have benefitted them quite a lot. Some correction in that coupled with some gain here with little less risk and more stability, less volatility, only can bring retail back. Only positive thing, we can probably expect, is that the kind of redemption pressure, which is continuing, may sober down as those early sellers might just settle down. _PAGEBREAK_ Q: What sort of stock specific strategy would you recommend at these levels? A lot of banks are sitting at 52-week highs, case in point Axis, ICICI, IDFC and even defensives such as ITC. Would you recommended going long on those or would you possibly advocate building positions in something which still has some amount of steam left, say something like metals? A: I wouldn’t compare a metal sector with the banking sector as such. We continue to remain positive on the banking sector. Last full year was a year of private sector banks. Most of them as compared to public sector banks have given phenomenal returns. Going forward, if one takes a full one-year view then I think that from current level PSUs will give better returns with their own share of little ups and downs. Overall, on a 12-month basis, PSU banks will give better returns from current levels. We are looking at that theme. I think would continue to remain selective in metals. Some of the issues getting sorted out internally in India may give a push to stocks like JSPL, which has been into some trouble off-late. However, broadly as a sector, I don’t think one would like to really look at that. It is so much internationally linked in terms of prices and margins. One would still like to focus on the infrastructure side of the economy. Everything, which possibly had to go wrong, has gone wrong in terms of slow execution to high working capital days to very high interest rates and enquires. So, to revive the economy some of these sectors definitely need to be revived, which is infrastructure and beyond that capital goods. That sector, on a 12-month perspective, should look very interesting.