Bullish RBS sees Nifty testing 6200 by year-end

Though Indian market is going through a volatile phase awaiting for three key events in the fortnight, it had shown significant upmove in the last two months. Some experts feel that the market is likely to continue the uptrend till year-end.

Parul Saini, Executive Director, RBS Asia Securities is bullish on India and thinks that the Nifty is likely to test 6200 by the end of 2012. In an interview to CNBC-TV18, he said, "We were actually one of the most bullish strategist out there in terms of outlook for the market. We have a target of 5800 for the Nifty beginning of the year which is starting to look conservative now which was based on around 13.5 times forward earnings."
The market is eagerly waiting for the UP election results on March 6, RBI monetary policy review on March 15 and Union Budget on March 16. Saini is hopeful that this time RBI's decision will lit up market as he is expecting rate cut starting March. Overall, the RBI is likely to cut 125 basis points in 2012, he pointed out.
As an investment strategy, Saini prefers ICICI Bank and Canara Bank in financial space while Cipla and Lupin are his favourites in the pharma sector. Saini also warns that ITC and HUL may underperform the market. Here is an edited transcript of his comments. Also watch the accompanying video. Q: We are entering one of the most important patches the market will have to deal with this year. What's your call on where things stand for India right now?
A: We are continuing with our bullish stance which we laid out at the beginning of the year. I think we were actually one of the most bullish strategists in terms of outlook for the market. We have a target of 5800 for the Nifty beginning of the year which is starting to look conservative now, which was based on around 13.5 times forward earnings.
 
But just a reversion to mean evaluations suggests we could end the year around 6200 on the Nifty which is a pretty significant upside from these levels too.
So net-net, I do realise this week and next, we do have quite a lot of news coming our way - we have the election results, the policy statement from the RBI and also what happens on the Budget. But putting that altogether, I still think it makes sense to continue with the bullish stance at these levels.
 
As you discussed with the UP elections, I think there is some certainty as to what the outcome could be. Although I think it's probably not in line with what some market participants were expecting, I think what the market would have really not liked is uncertainty.
 
But as you get the election results and there is certainty in what the outcomes will be, I think the markets will probably digest that without too much of weakness. In terms of monetary policy, I think there is some debate as to what the RBI will do in this policy statement given that they were looking to see what the government does on the fiscal deficit side.
But I think they may have some inkling of what the final documents are going to look like. Apart from a 50 bps CRR rate cut given the tight liquidity, there is a reasonable chance that they might start the rate cut cycle this March too. I would probably peg a 30-40% probability of a rate cut on March 15 itself.
Finally coming to the Union Budget, I think as long as the government puts out something that's credible I think that should be okay for markets although I would agree that expectations have risen since the beginning of the year given what markets have done.
But I do think as long as the GDP growth number that they are using is reasonable and if the deficit number that they come up with is somewhere between 4.9% to 5.4% and is based upon credible assumptions, the market should take that reasonably positively and it shouldn