Pre-poll rally not over; worst of earnings cycle done: Dron

Pathik Gandotra, Partner at Dron Capital Advisors LLP believes investors should use all dips to buy into their preferred stocks or sectors. He says the pre-election rally is not over yet, and that the market is not expensive at all. “We see 200-300 point upside in Nifty by election-time,” he told CNBC-TV18 in an interview.Indian stock markets have rallied around 4 per cent in 2014 with the 30-share BSE Sensex breaking above the psychological level of 22,000 this month. The rally in equities has been driven by foreign institutional investors, who have pumped in USD 852.10 million or Rs. 5,200 crore year-to-date.

Also Read: Investors shifting from IT, pharma into high betas: ChokseyGoing forward, Gandotra says earnings will be watched more closely than elections. He says stocks with strong earnings will be rewarded by the market. "We think the worst of the earnings cycle is behind us," he told the channel. He expects rupee volatility to continue for another one or two quarters. He advises investors to allocate 20 percent of their assets to high quality midcaps. He finds realty stocks attractive with a 3 year timeframe. “We expect to see a lot of intra-year volatility in 2014,” he says.