Samir Gilani, Head-Equities, MAPE Securities spoke to Jinsy Mathew on the outlook for the equity markets, December quarter results of India Inc and the stocks he is bullish on.


How do you see the markets panning in the near term?

After a flurry of positive economic data like the index of industrial production (IIP), inflation numbers and the CRR cut by the RBI has acted like a positive trigger for the markets. But I think now the markets will correct a bit, which is a healthy sign.

The Indian markets had shifted from oversold to overbought state with a matter of few days. Hence, some profit booking is inevitable. Also, now the Sensex is approaching its 200-DMA. Looking at all these factors, a pause in the rally is set in place before the markets react to the Union Budget and the election results.

What do you make of the situation in US and Euro?
 
As of today, America is placed at a much better position than the euro-zone. The numbers coming from the American shores have been improving consistently. Also, the positive effects of both the rounds of quantitative easing have started to become visible.

Also, with the interest rates on hold till 2014, the American economy has started to stabilise. This is the very reason why the American markets have remained resilient.

On the other hand, the Euro crisis is an ongoing process. To expect any quick solution for their troubles will be foolhardy.  But some consensus will be reached by the leaders in the coming months.

The foreign institutional investors (FIIs) have staged a comeback since the start of this year. Why this sudden turnaround?

Indian markets were oversold at the start of this year. So it was attractive at those levels as there were pockets of value in the market. Also, the positive economic numbers and the RBI’s policy action improved the acted as a positive trigger. So they invested with great conviction as the valuations were also supportive.

Do you think this is a good time to enter the markets?

One can selectively pick up certain stocks at the current levels but I would say not to overindulge. However, a clearer picture will emerge post the presentation of the Union Budget and the election results. Investors who are willing to wait till then can base their investment decision based on the market reaction to these two events.

Do you think rate sensitives will be lime light this year?

Yes, without a doubt. In the second half of the year, banks, auto and high beta names from the metals and infrastructure will be in demand as the RBI is expected to cut rates aggressively. So it won’t be surprising to see a shift from defensives to the rate sensitives.

Apart from these, which are the spaces you would be comfortable investing?

Information technology (IT) is one space I am positive on. Even though post the Infosys results, the entire space has remained silent, there are some value buys here. This sector stands to gain with once the situation in the US and Europe improves.

Are the Q3 results of India Inc in-line with your expectations?

The Q3 results were better than our expectations. There was a general consensus that this quarter is going to see very bad numbers. However, that has not happened which was a positive surprise.

Now, Rupee is below 50 against the Dollar. Do you think the worst is behind us?

Rupee made a parabolic rise and fall within a matter of few weeks, which is very unnatural. A five per cent correction (up or down) is the maximum one expects through a year for any currency. So, any bold moves like the one we saw in the Rupee will only lead to stabilization. I expect it to stabilise in the range of 47-49.