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Markets closed in green amid a highly volatile session. Cues from Asia and US were strong. Broader markets also closed higher and outperformed the frontline indices. Selling pressure was seen in select bank and capital good stocks. However, selective buying was seen in metal, IT and pharma stocks.

Amit Dalal
of Amit Nalin Securities, said after the recent rupee rise, he remains positive on IT stocks. For midcaps, the business environment is not completely hunky-dory, largecaps would be a safer haven, he said. He believes the Budget always breeds in interest, because there is a certain expectation that comes in when the Finance Minister is going to make a statement.

Excerpts from CNBC-TV18's exclusive interview with Amit Dalal:

Q: What would you do with the IT pack? The rupee is falling below the 40 mark and still a little tentative at this point in time. Do you think that this would be a good time to load up on IT stocks?

A: We have seen almost a 5% correction from the lows for IT stocks or even higher. I remain positive on the IT sector; I think there are lot of concerns on what their markets will be like and how their customers will perhaps pan out their business for the next one year. But the biggest risk about a month ago was the currency risk and therefore their realisations were at stake and that’s been taken away now, on the contrary it's positive now. So I remain positive and I think that perhaps these discounting ratios that have come down in the case of Infosys to almost 17-18 times, I think that will be a great time to invest and maybe even now the stocks offer an upside.

Q: Would you rather prefer the midcaps at this juncture or you think the bigcaps have already seen a bit of a recovery?

A: One has to be very careful in midcaps, because the business environment is not completely hunky-dory for them. So the client base, their strengths, make a big difference between one stock and the other. If one knows the stock particularly well, then I think that’s a stock one should invest in, otherwise the largecaps would be safer havens even now.

Q: Two sectors for you, the banking space with another set of cuts coming in and interest rates particularly from the PSU biggies and of course the metals pack?

A: I think banks. We all are aware that the NIMs are a little under pressure now and the banking valuations are suffering. I think that is fair until the RBI gives us any clear signal of where it is going with interest rates. Any banking rally will only come from there.

As far as metals are concerned, I think global markets have shown us that basic metals are doing exceedingly well, coal prices have gone up, iron ore prices have gone up. I would remain positive on the full pack whether Hindalco or Nalco or Sterlite. Even Tata Steel, though it is not fully integrated, all these basic metals will continue to do well as long as interest rates fall in United States.

Q: There is speculation that HDFC Bank is looking closely at buying Centurion Bank of Punjab, no confirmation, but they are believed to be talking on first cut. How would you react to this news, would that make Centurion a buy?

A: I think the news itself has been discounted by the market. One must realize that the discount issue of Centurion Bank of Punjab is higher than HDFC Bank’s discounting ratio, mainly because we expected a higher growth from Centurion Bank of Punjab from the low base that it is developing itself, whereas HDFC Bank is a mature bank, but growing at 30% and therefore has been discounted richly relative to the rest of the market. So I am not sure that the merger issue will be such, which will give someone even a higher spike in price given the fact that Centurion Bank of Punjab is not cheaply valued even today.

Q: What’s your own sense of participation in this market? We have been averaging turnovers of about Rs 45,000-55,000 crore, that’s changed over the last couple of days. We have seen more than Rs 60,000 crore on both days. Do you sense that with the Budget approaching and then the Fed meets, slowly but surely participation is returning to this market or is it still early to take that call?

A: I think participation comes only with leadership and confidence in a certain trend. So if the market is falling then the bear markets bring in all the bears into the system and if we see a sustained upward movement for couple of days or three days, then the retail market tends to come back again. I for one believe the Budget always breeds in interest because there is a certain expectation that comes in when the Finance Minister is going to make a statement.

If I were to take the liberty of saying that the levels, which the market has reached, for many stocks if one doesn’t have the expectation of 20-25% return in a month, then this is perhaps the best time for investors to get into a plethora of stocks; there is almost 70% probability of getting 20-25% in a year. I think people are missing that call which they can make right now.

Q: What would those stocks and sectors be?

A: If you give me the liberty I would go through few names of stocks and I might have bought, I might have not bought them, that’s irrelevant to the issue. But if I were to take 70% probability here, then Ashok Leyland, MTNL, NIIT Technologies, Syndicate Bank, DCM Shriram Consolidated. I can think of at least another half a dozen names like that where there is a good chance of getting at least 25% return in a year, they are very boring stocks but nonetheless.

Disclosure: It is safe to assume that my clients & I may have an investment interest in the stocks/sectors discussed.

Source: Moneycontrol.com