Mkt won't see runaway rally; like Infy, Wipro: Dilip Bhat

Market valuations do not appear cheap at current levels, nor will there be a  runaway rally going forward, says Dilip Bhat, joint managing director, Prabhudas Lilladher. He feels Nifty can at best reach 6200-6300, if at all there is a gush of FII flow again. The market will largely remain volatile and may see a level of 5500-5600 over the next three-six months, he says.

Also Read: Infosys beats street estimates: Does that mean TCS won't?
He advises investors to play the market very cautiously and stayed bullish on Infosys, Wipro and Tech Mahindra.
Earlier in the day, Infosys announced its second quarter results wherein it revised its full year revenue guidance to 9-10 percent from 6-10 percent. But Bhat believes the company will exceed the FY14 guidance rather comfortably. He thinks the pick up in volume growth will be the next catalyst for the Infosys stock price.
Meanwhile, Ranbaxy's US facility Ohm Laboratories has got manufacturing clearance from the US Food and Drug Administration, or USFDA. Bhat feels Ranbaxy looks reasonably priced at current levels. Below is the verbatim transcript of Dilip Bhat's interview on CNBC-TV18 Q: We have seen fair bit of rally, 6100 is here. How much more, do you think the market is getting a bit complacent running ahead of itself or you think this move is justified?
A: I think this is always going to be a challenge really trying to look at the markets because there is no doubt that the market is significantly ahead of the fundamentals whether it is the economy, whether it is the Nifty EPS growth or whether you measure it by way of price/earnings to growth (PEG) or whether you talk about the recovery in the economy or the uncertainty in the international front too.
But what is really changing the whole thing is the tailwind in terms of the Foreign Institutional Investor (FII) inflow which is really pushing the markets up. So whether we think that the markets will runaway from the current levels I don't think so. I think markets will be capped because fundamentals will definitely catch-up and at the current levels too markets are not cheap so 6200-6300 will be the maximum that one can think of if at all there is once again a gush of FII flow. But otherwise I think I would play it very cautiously and I still feel that markets will remain volatile and we may still see a level of 5500-5600 over next three-six months. Q: Do you expect the market to react in any way to all on the back of the macro data that is lined up - IIP, CPI post markets today and WPI on Monday?
A: I am sure, I am talking about all of this which will keep the volatility of the markets very much intact rather than markets being in a very comfort zone. I would still look at markets moving very erratically and in a very volatile way over the next couple of months.