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Ajay Srivastava, Dimensions Consulting thinks that the markets are waiting for one big trigger. The trigger may come in the form of the Budget or through cuts in interest rates, he told CNBC-TV18. He feels that this may be the best time to buy the stocks that one always wanted to.

Excerpts from CNBC-TV18’s exclusive interview with Ajay Srivastava:

Q: What is the call on the market - there is no pre-Budget rally in sight yet? Do you think we will perk-up or should we expect a weakish market?

A: Today, definitely we are expecting a weakish market. Logically speaking, the rest of Asia is also low. There is no major trigger in the system. The Indian market is waiting for one big trigger. One is the Budget and the second is the interest rate.

Everybody is getting bugged by the fact that the slowdown is for real; we are seeing a supply side issue and the cost price of interest is up. But the RBI Governor is not moving from his target to keep the interest rates. That is the big trigger for this market. Unless the RBI Governor comes with the interest rate, we are finding it difficult to find pure fiscal triggers for the market.

Q: What are the ramifications now for the market with all the IPO cancellations? Is that done and out of the system, or do you think that is going to weigh down on sentiment for a bit?

A: I don’t think IPO cancellations make any difference at all because IPOs have been cancelled because of greed and to some extent, market conditions. But the valuations they were wanting was to capitalise on pure greed in the market. It didn’t happen; so let’s leave that aside.

On pure fundamentals, the market is ripe for a buy. The question is, when will the big trigger happen, which is interest rates. We believe that in terms of fundamentals, the market is ripe for a buy, maybe 100 points here or there. This is the right time to start entering into stocks you always wanted to.

Q: From amongst what looks like a buy in the market, would you pick up anything from power - whether it’s utilities or whether it’s the equipment-makers; does anything over there represent value or interest to you?

A: No. If you look across those spectrum, if people like NTPC, if you look at power generation, it represents a lot of value at its pricing. If you look at the equipment sector, BHEL at this price of sub-Rs 2000 is looking very attractive to us.

L&T has taken a big knock; it’s down to Rs 3400-odd; it’s started to look into very good value-picks with a assured revenue stream in the markets.

So there’s a whole host of stocks that offer great value and safety - that’s more important today. Customers are saying we are going to buy the stocks where downside is limited; upsides could be whatever it is. This is different from a mood of December, where one said I am on stocks where upside is limited, downside can be whatever it is as well. But here, people are saying give me safe stocks with a stable return; not very volatile.

So enough places to find value in the whole sector today.

Q: You track a lot of those infrastructure stocks. What would you do with something like a Punj Lloyd, GMR, JP Associates at these prices?

A: If you are already invested, we are saying to keep a hold on the stocks; do not sell out. No matter what happens, there is long-term value there. If you are not invested in the stock, no better time to start investing now in these stocks.

So that’s where the call is. All the stocks that you mentioned have got long-term sustainability of revenues; they represent good value picks - pricing may have gone little excessive and has corrected excessively again on the both sides.

So to that extent, there is volatility. But value, if you are there, keep it. If you don’t have it, start buying.

Q: What’s the call on IT for you now?

A: Interesting situation, it’s a very strong defensive play - it’s the most under-owned sector. So rally you are seeing is people investing into it because they don’t own any IT stocks. That’s a good strong point.

But if you are looking at a big momentum play, I doubt whether there is going to be where the real value is going to come; I think 10-15% upside thereabouts - that’s what you are looking at IT.

So not too much allocation; but it certainly looks interesting.

Q: At any price in the day, does Reliance Power become a buy for you?

A: Obviously, at some price, it becomes a buy. If you say its Rs 100, in the next minute it will become a buy through the way. The answer is yes; there is overhang of liquidity in the stocks - that’s a problem in the stock; too many people, too many institutions are holding the stock; nearly everybody is holding the stock today in the market.

So that means that the buying is going to be limited, selling is going to be more. So to that extent, one would wait out and see great price correction of that order - Rs 100. But yes, it’s not a good idea to buy when everyone wants to sell.

Q: What’s a good price for you to buy? Have you thought about it or it’s not a stock which excites you too much?

A: Not in this market.

Q: What have you make of the way Reliance Power has listed today and how would you read the next few days for the stock?

A: I think it’s listing at Rs 400 plus on a stock where the fundamental would not command anything close to this. It is of the phenomenal opening; given the market context and given the other repricing of those stocks. I think at Rs 400, you are looking at serious amount of value being given to the Reliance Power for a company, which doesn’t have a project. So purely on a fundamental basis, Rs 400 plus pricing is a very strong plus; leave it being on the expectation of Rs 900. If they are able to sustain Rs 400-450, it’s an excellent pricing for the stock and the company.

Q: What about expectations on which it was being bought? Are you saying that Rs 400 makes it fairly valued and justifies the hype around the issue?

A: You were talking of Rs 900 - but on fundamental. In our view, the value should be valued on more Rs 150-200 or it maybe Rs 250 or thereabouts at PE. So if Rs 400 is the value that can sustain, that’s strong premium over the fundamental of the stock and that’s why we are seeing a great positive. On a fundamental, we will say not more than Rs 200-250.

Q: So you are saying in another way that Rs 400 is still overvalued for Reliance Power?

A: More certainly. That’s why I am saying that if Rs 400 can sustain itself, it is certainly overvalued compared to the fundamental of the stock.

Source: Moneycontrol.com