'Correction possible if Nifty closes below 5,150'

MARKET VOICE: D D Sharma, Senior Vice President, Research, Anand Rathi Financial Services

With the Sensex seeing sharp correction in the recent past despite a healthy show by the quarterly results, D D Sharma, senior vice president, Research, Anand Rathi Financial Services tells Puneet Wadhwa that the markets may touch new highs in the next one year. Excerpts:

Do you expect the markets to correct in the near-to-medium term given the Eurozone uncertainties?
Our market is ripe for a correction and is waiting for some triggers. If Eurozone trouble escalates, it might trigger a correction in the Indian equities, too. However, a serious correction may occur only if Nifty closes below 5,150 levels. Above this level, we are in a safe zone.

How did you find the results of the top Nifty companies so far? Any Positive/negative surprises?
Most results were in line with expectations, except Reliance that underperformed, and a few outperformances as well. Based on these results, Nifty seems fairly priced. Hence, no major correction (more than 10 per cent) can occur in leading indices.

Given Maruti Suzuki’s results and the road ahead in terms of the overall economic conditions, will you recommend investing in the auto pack at current levels?
Auto pack is the most richly valued sector. Thus, you should either buy on corrections/declines, or have a long-term investment horizon, as the outlook for the sector continues to be better.

What are you advising your clients at the current valuations? What are your targets for the Sensex and the Nifty for the next six months?
I am particularly focused on mid- and large mid-cap stocks. My strategy is to identify the undervalued stocks from the range of growth sectors. We continue to pick undervalued stocks across sectors. Some of our recent picks were — Kalyani steel at Rs 202, Garware Polyster at Rs 53 and Parekh Aluminex at 160. I can’t give you targets for the Sensex or the Nifty, but both should attain new highs in the next 12-18 months.