Markets unlikely to remain range-bound for long: Rakesh Tarway, Motilal Oswal Services

In an interview with ET Now, Rakesh Tarway, Vice President, Head of Equity Strategy, Equity and Derivative Products, Motilal Oswal Services Ltd, shares his market outlook. Excerpts:

ET Now: How do you see the market panning out? Is it going remain range-bound on the index?

Rakesh Tarway: The third quarter results have been better than expected. There will be some upgrade to Sensex earnings for FY15 as well as FY16.

The market will take a notice of those numbers in the coming three to six-month period. Based on FY15 numbers, we are currently at 13 times Sensex and Nifty both. Therefore, we should be seeing some kind of upside to these numbers. The election falls in between the coming three to six-month period. Hence, we should see some kind of movement in the overall index levels in the next six-month period. That is our broad call because valuations are attractive. I do not think that the market is going to remain range-bound for a very long period of time. In the coming three to six months, we shall see some movement in the Sensex and the Nifty.

ET Now: The expiry is about five or six trading sessions away. Are there any positions that you are advising your clients?

Rakesh Tarway: We have not advised anything. We shall take a look later on next week.

ET Now: There is some bit of traction in midcap IT for the last two or three sessions, especially post NASSCOM. Do you see anything in this pocket?

Rakesh Tarway: Yes, we like Persistent Systems, KPIT Technologies and eClerx in midcap IT. These are three-four stocks which we like in the midcap IT space. They have moved up a bit, reached these levels and then they have corrected now. They have moved up by 5-6 per cent.

Valuations are in the long-term average kind of range. Large movement in midcap IT stocks will happen only when there is a movement in large cap because they always trade at a discount to it. Hence, it is a broad sectoral call. A lot of them are midcap IT call. If the sector keeps doing well, these guys will do well.

ET Now: Run us through your top recommendations from a long-term perspective.

Rakesh Tarway: From a long-term perspective, we are positive on Infosys and Tech Mahindra in the large cap space. Within banks, it is HDFC Bank. Within midcap, we are positive on Gujarat Pipavav Port Ltd and eClerx. These are the names on long-term basis that we are positive upon.