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Nitin Raheja, CIO at Rada Advisors feels that it is going to be a painful market in the next three-six months. He sees great opportunities in metal space, infrastructure, oil and gas, power and construction space.

Excerpts from CNBC-TV18’s exclusive interview with Nitin Raheja:

Q: How would you read into this come back on the market, is it primarily an opportunity to buy for people who have been waiting on the sidelines or comeback of sorts primarily driven by short covering, giving people who are particularly trapped in stocks an opportunity to sell?

A: I wouldn’t say that it’s an opportunity to sell at these levels. But if you look at the market, it has created some sort of a double bottom in the last couple of months. In January, if you see the intra-day lows, it tested about 15,300 on the Index and that’s where it has rebounded from even yesterday. So that gives some kind of confidence that maybe, we are close to creating an intermittent or it’s a bottom for the time being at least, unless and until you get some bad news coming somewhere for it to go beyond that.

If you see the valuations of stocks that have corrected sizably - midcaps, largecaps etc, I would selectively start looking at getting into investing into the markets.

Q: What would be the areas that you would look at investing in? Would you be concentrating on midcaps or it is not mid or small but sectors that you would look at?

A: It’s purely bottom up stock specific, it’s not necessarily mid or small at the end of the day. We ideally want to look at stories which are not interest rate sensitive; we are looking at companies who have great visibility of earnings, which brings us back to infrastructure - especially the engineering space, which has taken a huge knock and companies in that sector - metals such as steel etc.

Q: There is a goodish bit of bad news that is probably likely to hit us from international quarters. Nobody is really calling an end to the credit crisis in fact people are still taking about the Citi Group’s latest research report speaks of further write-downs that is possible in the credit markets, so do you expect that this 15,300 bottom could be breached say in the next quarter or so?

A: I would think, some sizable amount of bad news would result in something around that - otherwise I really don’t think that should happen.

Q: How do you see the market panning out over the next six-months because a lot of talk has happened about international equities or particularly the US markets going into a bear phase and showing adequate signs of being in that phase. For the Indian market particularly how do see us reacting to that bit of news?

A: It’s going to be a painful market in the next three-six months. I don’t think Indian markets are really going to runaway in any which way. Let us understand, we have had three-odd phenomenal years in the market with returns exceeding 50%. One cannot have those kinds of returns sustaining forever. We have had valuations which have started running ahead of fundamentals. Now they are correcting. They have come within fair valuation ranges. So it’s going to take some time for fundamentals to catch up.

Q: So what are the earnings down grades at Rada or the fresh sells that you may have put out?

A: We don’t put out sells; we are not a broking house. But we are really looking at it as a fund house, an investment advisory company. We are looking at sectors where we believe that there is great opportunity from our side. We think that the metal space is one that looks good to us. We think all infrastructure – this probably encompasses services providers in the oil and gas space, power space, construction space - that’s the kind of areas where we would typically look at.

Source: Moneycontrol.com