See pre-Budget rally; hoping Budget addresses woes: Dilip Bhat

In the near-term also one more thing is certain that this FII flow, which, for October, November, and December were negative and we have seen that had taken the toll of the Nifty also, now whether this is going to turn positive in this New Year is something which all of us will be very keenly watching otherwise it will be very difficult for the rally to sustain only its own. It is a different ballgame all together that this Rs 15 lakh crore which is supposed to have come back to the banking system, whether some part of that money flows into the market is a big question that everyone is also talking about. I think even if some part of the money comes it will also provide a good tailwind.

All in all I think what will be most important is apart from the Budget what kind of talks the corporate tell us in the quarterly results. Whether the recovery is happening much faster than what all of us are thinking - I think that also will determine the sentiments. However, yes, in the near-term somewhat a small rally certainly is not ruled out at the moment.   Ekta: Would you be buying say agri as well as housing stocks because the talk is that those two sectors might face the positive brunt of the Budget this time around. What is your sense in terms of whether those stocks catch your fancy or those sectors?

A: I think agri and housing are the typical sectors - whenever the Budget is around the corner, the defence, the infra all those are the ones which come into the radar of lot of people and typically that has been happening. Therefore, more so this time because some of these sectors have taken it on the chin because of demonetisation and hopefully some of these remedial measures possibly suggested by the government, could give them a relief. So, these all would be the sectors which will come into the play.

However, if you ask me on secular basis whether these sectors I would look at - no, not really, I think it is still going to be pick and choose market at the moment for some more time to come, but one sector where the positive benefit of demonetisation is going to be felt is the organised retail sector, whether it is the likes of Future Group or any of these players within a particular group.

We have seen more traction, we have seen more turnover happening and with goods and services tax (GST) also getting implemented very shortly may be in next couple of months, this organised retail format will see more turnover, more profitability and more bottomline growth. So, this is one sector which I will be focusing on in this particular year.

Prashant: If one believes that the hit because of demonetisation was temporarily and things will bounce back and the underlying business had great potential, you will probably put non banking financial companies (NBFCs) in that basket in terms of how you think about it and NBFC, microfinance institutions (MFIs) like Bharat Financial Inclusion etc has come up very dramatically from the lows. It has sold off pretty dramatically and the rise has been sharp as well but it is still way off compared to the Rs 900 kind of levels it was at. There will be some impact but do you think there might be still value there? Bharat Finance is Rs 600 plus now.

A: The stock is not under our coverage but still on a very macro basis the stock can still give another 10-15 percent return from the current levels and that is what it looks like from whatever we have read and heard about the company and we have been wherever, they have been interacting on different platforms, so I think that is just one.

However, overall on micro finance company as well as on the NBFCs, it will still be pick and choose because some of them will be acutely impacted and the recovery might be slower and somebody will recover faster.

Therefore, within that space Mahindra & Mahindra Financial Services probably a stock which we can think about recommending rather than some other companies.