This is a good time to get into railways stocks: Ashwani Gujral, Market Strategist

Ashwani Gujral, Chief Market Strategist, ashwanigujral.com, in a chat with ET Now talks about the markets and stocks.

We have gone back to pre-Diwali levels and there is no participation, no open interest, nobody is excited. Everybody is so non-convinced about this rally. What is your view?

That is the reason you are not seeing volatility. The market can rise 1, 2, 3 days because people are trading on disbelief. Had there been huge participation, by this time you would be seeing one down day and volatility up and down during the day. But since everybody sold out, the market is way too oversold and needs to get the leverage back which it is doing.

The market probably has the best chance of crossing 6300 out of all the attempts we have made this time because there is so much of disbelief. People may take time in coming in and they may actually push the market to new highs by coming in late.

What is your overall sense about the trading range that you would believe the market would trade in and perhaps in the first months of the new calendar year?

It will remain between 5800 and 6300. Going too much past 6300 will require the banking sector to perform brilliantly, that would require inflation to come down. So let us call it 5800 to 6300 till we are actually past 6300. What is good is that today we have seen infra coming back and banking becoming at least a market performer. We have JP Associates moving in a narrow range. Probably everybody has sold out of these stocks and infra stocks are showing some kind of movement. They could be up 20-25% by the time market reaches the previous highs. So that is where you need to look at.

So the slack that was given up by banking is kind of being taken up by capital goods or by sub large infra stocks. That is interesting. But the other interesting thing is that around January 1, the railway stocks start becoming active and this is the best no brainer trade that by Rail Budget, most of these stocks will be up 25-30%. So this is a good time to get into your railways stocks.