May see a mild rally; buy Mah Satyam, Tech Mah: Religare

Reforms introduced in Parliament will help market to witness a mild rally in the days to come, says Gautam Trivedi, MD & Head of Equities, Religare Capital.

There is a whole bunch of reforms that needs to be done outside the parliament which the government should be focusing on at this point.

Gautam Trivedi

MD

Religare Capital

Reforms introduced in Parliament will help market to witness a mild rally in the days to come, says Gautam Trivedi, MD & Head of Equities, Religare Capital. He admits that the market has not performed, collapsing on the Budget day and in a series after that.
He feels unfortunate political developments, RBI’s hawkish stance and weakness in the economy have made investors nervous. It’s not a crisis situation for the UPA, but may result in increased political uncertainty in the near-term, Trivedi said.  He feels if 200 DMA is taken out, market could see further downside.

Speaking about FII investments, Trivedi said they are investing in hope although domestic investors have stayed away due to a slowdown in underlying economy. He said Nifty can survive on FII money, but appetite for midcaps can worsen. He says only 23 CNX midcap stocks have traded above the 2008 highs showing the rally has been extremely narrow.

Religare is positive on IT sector given the performance domestically and is bullish on Mahindra Satyam and Tech Mahindra .

On autos, he believes the concerns on import duty have dented sentiment. He feels the Mid and heavy Commercial Vehicle space is of a bigger concern. He remains bullish on Tata Motors and finds Rs 272-Rs 275 price attractive.
Trivedi is not very keen on SAIL OFS, saying the stock has not performed. He prefers Tata Steel over SAIL.

Below is the edited transcript of Trivedi's interview to CNBC-TV18.
Q: What is it looking like? These last few days have looked quite vulnerable for the broader market.

A: There is a bit overdone concern with respect to the Dravida Munnetra Kazhagam (DMK) pulling out of the government and the government’s ability to push through reforms.

At the same time, the price correction and the selling which ensued thereafter obviously got a lot of people spooked. I am expecting a mild rally. We may see foreign funds waking up and saying okay, maybe this is not that big a deal after all. The way we see it is there are two sets of reforms taking place at parallel.

One is the bit that is coming through the parliament and the second bit which actually is outside the parliament. So, things like the Pension Bill, the Insurance Bill are all driven by the parliament. Ofcourse to some extent, even the diesel price hike may face opposition, but outside of that, there is a whole host of stuff that is sitting outside of the purview of the parliament which the government has to really now focus on. There was an article in leading financial papers talking about almost Rs two lakh crore worth of projects sitting incomplete for lack of environmental clearances and a bunch of other clearances. So, there is a whole bunch of reforms that needs to be done outside the parliament which the government should be focusing on at this point.