RL Narayanan, Vice president - Institutional Business, Bonanza Group spoke to Rex Cano on the markets.
 
Hi Narayanan and welcome. The markets at near 30-month high. Do you think they’ll be able to hold on to these levels?
 
As one looks at the market, clearly the risk-reward matrix is not in favor of bulls and the market has come up from the levels of 4960. The probability of Nifty crossing 5,550 is only 20 %.
 
As I always say, it is very difficult to predict market and very easy to align with market; so the simple think to do would be as markets are in uptrend keep buying at support till market proves otherwise. Good support for market is at 5110 levels on the downside. I expect them to trade rangebound. Investors can buy good value low beta stocks.
 
Auto, FMCG and IT have been the major outperformers so far in the last 30-months; do you see the trend continuing?
 
I have been recommending an exit from auto stocks in a phased manner. Stocks like Hero Honda and Maruti have corrected more than 10% in the last one month.  View on auto continues to be bearish one exception to the pack would be Tata Motors.
 
We are still bullish on FMCG and IT as a pack fresh buying should be initiated only at supports and not on breakouts. After any correction this two sectors will have a faster bounce back.
 
What sectors are you bullish on for the rest of the year?
 
The two sectors in which fresh buying can be made are pharma and infrastructure. Sugar stocks could be added on a correction. 
 
Any sectors, which, you would recommend to avoid?
 
Avoid all large cap cement in totality, real estate, auto and all high beta stocks.
 
Were the Monetary Policy measures unveiled earlier this week as per your expectation? Do you expect the rate tightening bias to continue?
 
From the recent move, it is very clear that central bank wants to tame inflation and in fact wants to be proactive about it in the future. At the same time, it has its eye set on growth.
 
The increase in repo and reverse repo rates is broadly in line with the expectation. But if one sees the macro economic situation and inflation, tightening bias might continue.