Employees monitor stocks at a brokerage firm in Mumbai, India (Photographer: Dhiraj Singh/Bloomberg)

Pre-Budget Rally To Push Nifty Towards 8,600: Prabhudas Lilladher

Indian equities have gained momentum after a dull first week of a new year. The NSE’s Nifty 50 index managed reclaim the 8,400-mark in early trade on Thursday, led by a rally in shares of technology and banking companies.

Dilip Bhat, joint managing director of Prabhudas Lilladher attributed the gains to some aggressive buying in index futures by foreign institutional investors (FIIs). Bhat said he expects the Nifty to scale the 8,600-mark soon.

This pre-Budget rally is likely to continue for another 200 points. If you look at the FII data, they are selling in cash but buying in futures. That is providing good support along with domestic fund flows. We hope that the Budget is good. All this is providing good tailwind for the market and keeping that in mind, it is possible for the Nifty to touch 8,600.
Dilip Bhat, Joint MD, Prabhudas Lilladher

I.T. and Drugmakers: A Contrarian Bet?

Software services providers and drugmakers have taken a beating ever since Donald Trump won U.S. election on fears that the Republican may employ polices that would be seen unfavourable for the exporters.

However, Bhat said he expects both the sectors to do well this year. He said the I.T. sector seems a reasonable bet at current levels. He also remained optimistic on the pharma sector, saying that he won’t be “unduly affected”by comments from the President-elect.

Apart from I.T. and pharma, Bhat also saw value arising in certain infrastructure companies along with the organised retail sector as well as the banking and financial space.

‘Earnings Won’t Be A Washout’

IndusInd Bank kick started earnings in the December quarter with better-than-anticipated numbers giving hopes that most companies will be able to weather the demonetisation storm. Bhat said the organised retail sector is likely to perform well despite the cash crunch.

Earnings this quarter will be a mixed bag. Some companies will do well, while others may take it on the chin. But I don’t believe that the earnings this quarter will be a washout. 
Dilip Bhat, Joint MD, Prabhudas Lilladher
BloombergQuint