Markets won't find it easy to climb over 8,600-8,650 levels in a hurry: Yogesh Mehta, Motilal Oswal

In a chat with ET Now, Yogesh Mehta, VP, Group Leader - PCG Advisory - Equities, Motilal Oswal Securities Ltd, talks about markets as well as some sectors and stocks. Excerpts:

ET Now: Is the mid-air turbulence behind us? Are markets on course to regain higher levels?

Yogesh Mehta: It is a dilemma-like situation right now. All global negatives have been discounted so far in India; and we are almost immune to those now. The result season is almost over, so are RBI policies. But we are still very much strong around 8,600.

I see a consolidation at these levels. Midcap companies are in action since the last three days. So, we think 8,600-8,650 should be a consolidation zone. It won't be that easy to surpass this level with full confidence. It will remain a resistance level.

ET Now: What are you advising your clients to do at the moment?

Yogesh Mehta: We are nearing a short-term high, but there are companies which are available at decent valuation.

Preferably, avoid such companies that have touched new highs lately. Buy the ones available at resonable valuations.

ET Now: What are the themes that you like at the moment?

Yogesh Mehta: Private sector banks remain a favourite because their loan book growth and deposit growth are strong. The capital goods sector also should show some good momentum on the business front.

ET Now: Did you say banking?

Yogesh Mehta: Yes, private sector banks.

ET Now: What about PSU banks?

Yogesh Mehta: Post the government's announcement on recapitalisation, the PSU banks seem to have some good opportunities going forward. The downside seems very limited for them.

The valuation gap between private and public sector banks can't remain so widened. It has to narrow down somehow.

ET Now: What about the rally in midcaps?

Yogesh Mehta: Low raw material cost post the crude correction has been a big booster for many midcap companies. I see the situation continuing for another quarter or so.