Pradeep Gupta, Co Founder & Vice Chairman, Anand Rathi Securities talks to Ujjval Jauhari on the current market situation and likely triggers for the road ahead.

The markets surged to a new 52-week high recently. Do you think they have factored in all positives from the results? Can they sustain these levels?

The markets look pretty good form a long-term perspective. The positives of the results remain factored in, and as such, with more results being declared, markets may react accordingly.

Overall, the markets at these levels may continue moving sideways for sometime, and even we may see some small corrections. But with corrections more liquidity will come in. Growth prospects remain strong and so does economy. There is confidence and conviction towards long term capital markets.

What are the possible triggers for the markets to be looked at by investors? What do you advice the investors to do?

As far as triggers are concerned, performance in the next quarter will act as the trigger. The continuation of performance and change in valuations over next quarter will be drivers for the market.

However, markets look very strong in the long run and Investors should use all opportunities on corrections to accumulate the stocks. They should carefully select the stocks and sectors and buy at reasonable valuations.

Infrastructure, automobiles, especially the commercial vehicles segment has a lot of opportunities. Banking will also perform and there is lot of more value unlocking to take place.

We have seen a robust growth in FMCG and auto sector albeit in the back of low base last year. Do you see the growth momentum continuing with the recent RBI moves?

We are talking of two sectors. As far as automobiles are concerned, there may be small impact. The sector offers good opportunities. I specifically think that in commercial vehicle space there is some steam still left that offers good opportunities.

In the FMCG segment, the Indian consumers are not much leveraged so not much impact can happen.

What are your Sensex and Nifty targets for the year end?

It is a difficult call to make. However, post September we may see 10% upside coming in Sensex and Nifty if things keep going in right directions. On the blip side, the concern will lie on China and Europe performance and any negatives over there can impact the upside.

Inflation has been running away at a rapid pace. Do you see inflation numbers softening any time soon?

Inflation should come down and Wholesale Price Index (WPI) should soften. We estimate the index at around 6-7 by December and around 5.5 by March. We are not seeing much price appreciations in the global arena and we should be moving in line.

RBI has increased repo and reversed repo rate although CRR has been kept unchanged. How do you see this RBI move? What are the implications?

RBI is doing a good job. They are bullish on growth and don't want any inflationary pressure to come in. So, they are trying to control the liquidity factor. Although we were expecting 25 bps hike in reverse repo and they have been more aggressive with 50 bps hike, nevertheless it is in right direction.

The moves will be positive for banking and real estate. RBI is moving cautiously and not playing around with growth.

What are your views on the new takeover code?

Well, with regards to takeover code, there are lot of complexities and legal implications to be taken into consideration. But on the whole it will strengthen the Indian corporates. Overall it is positive move.