Share Bazaar News India

Amit Dalal of Amit Nalin Securities said that June is usually a good month for the markets and therefore one may see a nice platform being built for a rally in June. "But I would be wary of buying at higher levels in May or buying any higher levels from here because one can always have volatility which may against for the rest of the month also," he said.

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

Q: How are you feeling about how this week has shaped up and what this month might throw up for the market?

A: I think the market is doing exactly what I thought it would and that is on a complete positive correlation to the US markets. US markets have given us a real surprise move upwards and has sustained even with such high oil prices.

My guess is and I have a zero ability to forecast this - oil has gone up from USD 90 to USD 125. So, maybe the markets are seeing this as perhaps a top for the time being and hopefully the oil prices will show some relief on the downward trend in the next 15 days or so and that could be a positive for global markets.

Q: What did you make of the inflation figures this afternoon and how does it translate into the performance of banks as most people are talking about more CRR hikes, given the liquidity environment, would you look at banks now?

A: I think PSU banks perhaps have some value story that one can look at. They fall into very low P/E ratios in terms of inflation and therefore the yield curve adjustment that is being done on the stock and trade of banks, that is a complete mark to market story that continues. I would not be that concerned just looking at bank’s value in that because that is not going to change.

With regard to the number itself, I think that number is anyway hidden because we don’t allow oil prices to impact our petrol and diesel prices in India. So, if you add that, then I think we have a horrendously high inflation number.

Where banks are concerned, when credit and capital becomes scarce, that is the situation right now, they usually benefit because they are able to pass on higher interest to the borrower. So, given that situation, I think they are better off and maybe you might just see some improvement in NIMs in the first quarter.

Q: What about power. Through this week, there have been dribs and drabs of interest in Tata Power, Suzlon Energy some of the allied stories. Is some kind of interest coming back there you think?

A: I think so. I think they took a huge beating after Reliance Power issue and Reliance Power was the frontrunner for evaluing and the movement of power stocks and as we know Reliance Power has gone up in the last two weeks and even quite strong today. The power generation story remains very much intact. The need for power is known to all of us and the fact that the valuations of these stocks are little higher side because the utility stock is a question mark. But merchant power is a big story in the offing and therefore I would always remain positive in power. You have over valuation, under valuation as a part of the game but at least for next two-three years power generation stocks and companies will us good results.

Q: Would you buy anything from the metals space both ferrous and non-ferrous?

A: I think commodities are going continue to show us a positive strength throughout the year. I will name two stocks in which I have a vested inertest in Tata Steel and Sterlite Industries.

Q: One word on what people traditionally expect of May and whether in that sense you expect it to be different sort of month?

A: I think May has always been a weak month and if one considers a fact that we are still far away from our highs, the market has shown a correction in the beginning of the month too. I don’t think May is usually a month where one should expect the market to be very aggressively poised but June remains a good month and therefore we may see nice platform being built for a rally in June. But I would be wary of buying at higher levels in May or buying any higher levels from here because one can always have volatility which may against for the rest of the month also. But on the whole it depends a lot on how global markets do and how oil does.

Q: Is this still a stock pickers market you would think?

A: The volatility in the market is definitely not something to be comfortable about. If you take last Friday, we closed weak and this Friday we are closing strong. The week does not have anything to do with what we had or what we felt about the market some time ago. So we are going to have to get used to this; it is a trader’s market. It is a market that is overweighed with fundamental concerns. You have oil prices at very high levels. But if oil recedes, then globally markets will start seeing some relief. Equities have had almost a 5-months underperformance. So, there will be more allocation to equities. But I think a lot rests on what is going to happen in oil in the next few days.

Q: You would rather not stock pick but what would be the advice for at least an investor if not a trader?

A: I would definitely stock pick. I think when a market falls like we saw, the fact that commodities have done well and I had advocated buying commodities; commodities look like it’s in an up cycle. Technology and midcap technology stocks are plenty of them which are still going to be revalued upwards, one can definitely look over there.

But one has to be careful of overvaluation like in the capital goods sector or an infrastructure space where perhaps from whatever we hear, the inflation is causing a slowdown and government purchases are going to recede because of the high fiscal deficit that we have in front of us. So selectively, definitely there is a case to be made for a many stocks to remain invested in. at what level to buy, I think that’s stock specific here.

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

Source: Moneycontrol.com