Mkt to stay choppy, pick & choose; Bet on CIL, M&M: Experts

Sudarshan Sukhani of s2analytics.com, in his advice to investors on CNBC-TV18, explains that the market offers few opportunities for positional traders and holds almost nothing for short-term traders. "Positional traders could buy a little Nifty - either Nifty calls or Nifty futures with a stop loss of 54.50. Though this is a significant drawback, it is the penalty for high reward."

Sukhani adds, "For the short-term trader, there is nothing to trade in. The markets were expected to be choppy since Monday As far as today is concerned, the only trade is in the Bank-Nifty which can be bought into at this current dip. But stay away from the Nifty."
Meanwhile Prabhudas Lilladher, joint MD, Dilip Bhat, in his fundamental analysis of the market, adds that it will still remain a pick-and-choose market for some more time to come. "Investors will probably have to keep on reshuffling and rotating portfolios to make any reasonable money in the long run." Below is an edited transcript of  Dilip Bhat’s fundamental analysis of the market on CNBC-TV18. Q: Do you believe that this current market move up until the 5,600-level is sustainable? Or do you think that there could be a big hurdle?
A: With way the reforms were really announced, there was a bit of optimism that the index could possibly test the 5,800-levels and based on further reforms, it could go right up to 6,000 and beyond. Probably, that was what a lot of people were talking about.
Given the state in which we are at the moment, even if one were to assume that these reforms would go through and the government survives, the call would still be that probably these were the last big-bang reforms to correct the fiscal deficit in particular. I don't think one can expect anything beyond that.
Given the way the RBI has observed on inflation, the way the economy is going and even about the international scenario, one doesn’t get too much of confidence that on the fundamental side the economy can really grow beyond 6-6.5%. It would be very difficult to justify levels beyond 5,800 and 5,900.
Probably these reforms have given a perceptively slightly higher bottom, but I am not too sure about that. At the same time, I am still very circumspect and apprehensive. I think markets would look for correction because there are not too many stocks that you can root for if the market starts to go beyond current levels. Q: Do you think reforms will be implemented in their original form?
A: Even if the reforms go through, I hope that the UPA finds somebody else to support them. However, it is important to note that it will be difficult to announce such reforms without facing fear from a gamut of problems including a downgrade. Q: The mood has clearly improved in the last one week or so. Which would be your highest conviction bets in the Nifty to capitalise on the improvement in the sentiment?
A: Coal India certainly remains a top pick because in the coming years we do see that the volumes will pick up. Overall valuation parameters still remain very much within the reasonable zone at the moment. So Coal India still continues to look pretty good. Ranbaxy looks interesting at the current levels. Dr Reddys has corrected very significantly and on the banking front, I would still go for a stock like SBI, which looks a lot better than private banks which have had a good run up.
_PAGEBREAK_ Q: The restructuring of power SEBs by the end of the week is eagerly awaited. What is your view on banks that have exposure to banks and companies such as PNB, PFC, REC and PTC which are exposed to the power sector?
A: If investors have that confidence in the government, it they will definitely do something to solve this problem.
Some of the above-mentioned stocks will heave a huge sigh of relief especially on NPAs. PSU bank-stocks which otherwise have a huge exposure and a high interest look pretty interesting at the current levels. Q: In less than three weeks from now, Infosys will announce its quarter-results. After last quarter's performance, many investors are quite despondent on the stock. But there has seen a huge run up in the stock since then. What do you expect this quarter around? Do you think there will be any improvement in performance?
A: On a more macro-economic perspective, it will observed that Infosys and TCS are undergoing a transition in management, with the new leadership being slow to get a grip on the challenges in the industry is facing. It is not a case of poor performance.
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But the ghost of poor performance lurks round the corner and will continue to cast its shadow. I don’t expect any great information from Infosys in terms of volumes. I do not know how the depreciation in the rupee will play out. And I doubt if investors will be interested in the stock.
Infosys still remains a very defensive bet at the current levels. So if one is trading in the current scenario, it will be one of the few stocks which can be owned because it has not moved quite a bit, though last fortnight it has went up by 7-8%. But I still hold the view that Infosys is more of a defensive bet. Q: What is your view on rate sensitives as a whole? How would you play it ahead of the policy in October?
A: Investors are expecting the rate-cuts to happen. And to some extent, that is really being factored in. Both automobiles and infra stocks have shown some movement. Infra companies appear to be a lot better placed to capture that particular advantage of the move which possibly could happen.
As far as the auto segment is concerned, Mahindra & Mahindra looks good with Bajaj Auto and Hero Motors leading the two-wheeler segment. Q: Has anything in the last one or two weeks changed the strategy in the market from a sell-on rally that to 'a buy on dips' ? Are more reforms needed to take that strategic call?
A: Buy-on-dips would require a lot more reforms than what is really being done at the moment. Apart from the policy intent, which the government has announced, there has to be on-ground implementation.
Otherwise this rally will run aground and I don’t think that it will really sustain beyond the 5,800-evels. I think it will still remain a pick-and-choose market for some more time to come. Investors will probably have to keep on reshuffling and rotating portfolios to make any reasonable money in the long run.