Mkt surge could go on; bet on next few quarters: Experts

Sudarshan Sukhani of s2analytics.com explains to CNBC-TV18 about the market surpassing the resistance level of around 5,630-5,650 quite comfortably today, his forecast of the extent of the upside in the markets and the next resistance level for the Nifty now.

"That's a positive message from the market. The band of resistance which held for many days was crossed today without any effort. The next level is 5,730. But if this momentum continues, the market will cross that level too. The possibilities that the market could halt at 5,730 and retreat, have not faded away completely. It is best for the trader to look for long positions on the trade."
Portfolio manager PN Vijay of askpnvijay.com expects Parliament to be able to enact many of the financial Bills other than the FDI in retail as most of them have been under Parliament's purview for quite some time. Amar Ambani, head of research, India Infoline, opined that the worst for the telecom sector and the economy was over and added that the government will take all efforts to prevent a credit-downgrade by maintaining the momentum on reforms. Below is an edited transcript of PN Vijay's analysis on CNBC-TV18 Q: BPCL has outperformed the rest of the oil-marketing companies on year-to-date basis particularly on the back of the rise every time there is news from the Mozambique block. What have you made of the latest new from Mozambique? What did Anadarko have to say and how would you approach BPCL as well as Videocon?
A: The news is definitely positive for both and has pushed both up a nice move up in a bull day with every stock getting attention on just little bit of news. But I won’t go any farther. BPCL has too big a domestic operation for these news to have a very lasting effect and probably with this move, all the good news has been factored into the price and I don’t think this government, which is not having it easy in Parliament, is in a mood to raise petro-product prices in a hurry. So, I don't see any great movement on any fundamentals. I accord BPCL a ‘sell’ on rallies. Q: Moody's has said that the Indian economy is pretty much stable and has rated India ‘Baa3’ which is quite positive. What would you assume with regards to Moody’s call on India?
A: It is a very significant statement because Moody’s and S&P are the big rating agencies, though Moody’s has traditionally viewed India with truth, concern and sympathy.
Globally, S&P has tended to be a lot more negative on sovereign debt than Moody’s. The last time the government increased petro-product prices was to, in a way, suit Moody’s and S&P if it lost an alliance partner and went into a minority.
So, I think Moody's rating shows some positive mood and good nature towards India’s effort which goes well with long-term investors because their major concern is not about growth but how deficit will be controlled, interest rates will be reined-in, government borrowing will be tamed.
The downgrade from S&P, even if it will be announced, is at least 12 months away and entails the adherence to regulations, examination of the outlook and allowing the government of the day a period of 15-18 months. This does not mean that if India doesn’t meet the 5.3 percent fisc, there will be a downgrade tomorrow. So, we need not have to spend sleepless nights on S&P just now. Q: What about the market per se? Are you turning a little more hopeful about what will happen in the Winter Session of Parliament? Is the government likely to muster support for FDI? How would you approach equities in December?
A: The big relief is the inability of the passage of the no-confidence motion. The FDI-in-retail initiative is important, but it is not earthshaking as far as the politics of the day are concerned. I think there will be a resolution in the next few days. The Congress may probably agree for voting under Section 184 because it is sure of the numbers which will be very positive for the market.
December as of now looks hopeful because India is playing catch-up with the sharp rise that Europe and US have posted. India did not rise in October and November. In fact, the market has lost as compared to its global counterparts. So, if India’s macro-factors show signs of improvement, India may join the party especially after the Greek settlement. So I am pretty hopeful of December, though these markets are volatile. But, you can never tell. Q: With just a fortnight available for Parliament in the Winter Session, do you think the government will be able to enact other Bills or will the entire period be spent on FDI in multi-brand retail?
A: Not really. If there is a discussion, such as a no-confidence motion, it is conducted within a maximum period of two days.  Some of the financial bills like the Pension and Insurance Bill have been on the anvil for a very long time and Parliamentary committees have had a long time to look at them.
Ironically, members of Parliament have a little knowledge about issues such as the Companies Act, Insurance and Pension Bills. Political parties are more concerned about the quotas for SCs and STs as it is a major election issue. Q: What is your call on ONGC and the USD 5-billion OVL bid for Kashagan?
A: The OVL bid is very positive because ONGC has a big problem in increasing its production. Many of its wells in India are running dry and it has been behind the Chinese in acquiring overseas blocks. Thougth the PSU has been sitting on a huge cash reserve, it has not announced any acquisition in the last one year. The Kashagan bid provides a balance of more than a million barrels of output But news of this kind can only take the PSU only up to a point as it shares a considerable portion of the subsidy burden.
So, unless there is a dismantling of the administrative pricing mechanism through cash transfer system, ONGC will be significantly volatile and is not the type of stock investors should buy. Q: How would you approach Jet Airways  on  a dip? Do you see a deal actually materialising with any Gulf carrier?
A: There would definitely be gains because Jet does have a lot of debt on its balance-sheet and the fact that a brand like Etihad is involved is an enormous source of confidence to the investors as it could allow a lot of financial engineering to reduce the debt. The deal also offers phenomenal potential with Etihad’s access and network. So, this is a huge positive for Jet.
The worry remains that the share posting such as huge run-up leaves little room for any further upmove. But I don’t see Etihad paying much more than what the market price is right now. So, there may not be immediate gains in Jet, but in the long- term Jet would get substantially rerated. Q: What is your estimate of the GDP data that will be announce on Friday? A CNBC-TV18 poll has indicated a range of 5.3 - 5.8 percent with pessimistic views at as low as 5 percent. Do you share this pessimism?
A: I would be pessimistic enough to be in the lower range of the opinion poll. GDP has three legs - agriculture, which is about 17-18 percent, industry, which is about 25 percent and services, at close to 60 percent.
Now services will surely deliver 8 percent, which works out to 4.8 percent. But it is not sure whether the industry will deliver anything after the disastrous IIP data. So, industry and agriculture offer little in terms of contribution to GDP.
Altogether the GDP could be at 5.3 percent and any growth in India would start from Q3. So, be prepared for bad GDP data, but hope that the next two quarters would be a lot better. Q: Where do you see United Spirits headed from the Rs 2,000-level?
A: I have stopped talking about United Spirits. Even the market cap-to-sales are different that investors have been talking about is gone. So there is no value left in United Spirits. Below is an edited transcript of Amar Ambani’s analysis on CNBC-TV18 Q: With news from various quarters, would you be more bullish on the Nifty considering that it has gone above the 5,700-mark quite sustainably today?
A: The current level of the market is pretty reasonable from a valuation point of view. After the run-up in September, the market posted sideways movement for long time. So, I think this correction can be bought into. There is a lot of headwind and investors are keenly observing the GDP, the rupee and global events. But global events such as the US fiscal cliff and the European crisis are a reality, but from an Indian-market point of view, they will fade from memory in a month’s or two months’ time.
If the Winter Session of Parliament ends inconclusively, there is room for hope as the government, one way or the other, will maintain the momentum on reforms and other initiatives that will excite the market and the economy to avoid a credit-downgrade and boost its image before the elections. Q: Where is your stand on telecom?
A: The worst is over for the telecom sector. Investors can look forward to better times and balance-sheets. Overall, there are some headwinds and I would not expect a big run-up.