Sensex to trade in 17,500-18,500 range: KR Choksey

Speaking to CNBC-TV18, Deven Choksey of KR Choksey Securities said the Sensex will remain in the range of 17,500-18,500 for some more time and will probably consolidate at that level.

He added that with new triggers coming in the market, it may look up. At the moment, he does not see too many negatives coming into the market.

Excerpts from CNBC-TV18’s exclusive interview with Deven Choksey:

Q: What kind of range will the market get off with now?

A: The market opened with a gap and went down further because of weak global cues. Too much of volume is not seen and participation is very weak.

Around 60-70% stocks are in the reverse arbitrage situation, wherein you definitely require the cash market stocks available with you, to go for reverse arbitrage.

I maintain that 17,500 and 18,500 range will be there in Sensex for some more time and will probably consolidate around that level. With new triggers coming in to the market, it may look up. But, as of now, I do not see too many negatives coming into the market.

If they are not coming into the market, then I do not see market going down too badly. Some amount of value picking at the lower levels would be the approach, as far as I am concerned.

Q: Would you build positions in fertilizers, ahead of the Budget?

A: Certainly not. It is the most uncertain sector to play with. The government may have to work on the subsidy front.

Being the last full year of the government, this Budget will probably have to see how many bold measures they can take. At this point of time, we would not like to take a call on this sector.

Q: It is the last day for subscription for Emaar MGF. What do you expect to see on this and what is your own take on valuations here?

A: If one looks at the top two companies-DLF and Unitech; one will find that these companies are available at a good valuation for FY09, given the direction call that they have given. Both DLF and Unitech are available at better valuation.

So, to a greater extent, there is larger surety available in these two companies, as far as their earnings are concerned. I am not saying Emaar is not going to produce earnings. But at the same time, the clarity on their transcript is missing. On the face of it, the stock looks to be expensive. So, I am not sure whether one should go for the IPO in Emaar or should remain invested in DLF and Unitech kind of companies. I would rather stay invested in DLF and Unitech.       

Q: Has any value emerged in any of the infrastructure stocks, like Punj Lloyd, JP Associates and GMR or do you think they need to cool and consolidate more?

A: I would expect them to cool and consolidate a bit because each of the companies have got a good amount of order book position and visibilities in earnings.

But, at the same time, there is some amount of nervousness in the market. So, to my mind, given some more time, it will be a good time to buy.

Q: Any interesting midcaps that you have been recommending to your clients to pick up on bad or quiet days like these?

A: A few of them are easily available. They are fundamentally so strong that you are tempted to pick them up. One particular company that we find very interestingly placed is Sterlite Technologies, which was earlier Sterlite Opticals. This company has a very strong business model. Going forward, looking at ever increasing demand for broadband, this company looks pretty strong at the current level. They also have an integrated model, in which they are operating right now, with the aluminium conductor business also having a fairly good order book position,

So, investors can invest with a view of more than one year. One would definitely get around 50% appreciation from this stock easily. So, there are such kinds of quality ideas available in the market, which were up till now good but neglected because of whatever the problem in the market is.

I think it is a good time to pick up such kind of companies.

Disclosures:

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