(Markets have been on a roller-coaster)

NEW DELHI: Markets have been on a roller-coaster ride, given the fact the S&P BSE Sensex has rallied over 500 points or nearly 3 per cent so far in the month of May, supported by a gush of global liquidity.

According to experts, global liquidity is likely to remain buoyant as Japan has kick-started an aggressive liquidity easing programme in its boldest move to revive the economy.

The US Federal Reserve is already expanding its balance sheet by $85 billion every month and is unlikely to taper off its purchases until mid-2014.

Equities as an asset class are in some kind of uptrend supported by global liquidity. If we look at the numbers, we have seen year to date $14.5 billion of absolute FII flows coming into India, said Gautam Trivedi, MD & Head of Equities-India, Religare Capital Markets Ltd, in an interview with ET Now.

The flows are up more than 70 per cent year on year, which is a staggering number. If you look at the liquidity in general coming into Asia, then Japan in particular has been a big magnet for liquidity this year, he added.

However, given the gush of liquidity, some experts do feel that our markets have moved ahead of fundamentals and there is a possibility of some consolidation before we resume the uptrend.

If we look at India, despite all the macro negatives we have seen a reasonably strong performance in the markets, said Sunil Garg, MD, Head of Research-Asia Pacific Equities, JPMorgan, in an interview with ET Now.

Going forward, we might see a little bit of a pause for consolidation right now, although we could end up with the year finishing off quite strongly, he added.

Going ahead, analysts feel that with easing commodity prices, inflation being reined in and interest cost expected to come down, corporate earnings outlook and with a lag investment outlook are likely to improve.

We expect Sensex earnings to grow at a much healthier 14.5 per cent over FY2013-15 as against 6.1 per cent in FY2013, Angel Broking said in a report.

We believe that the Sensex is likely to make new highs in the coming months on the back of improving domestic outlook and strong global liquidity flows, added the report.

Midcaps, which have so far lagged the benchmark indices and defensive sectors, are likely to pick up some bit of momentum as the market moves higher.

So far the midcap sector has primarily been the defensive sector, but going forward considering the sharp decline in inflation, the outlook for rate-sensitive sectors is also likely to improve, Angel Broking said in the report.

We have compiled views and recommendations from various experts on sector or stocks they are bullish on in the current volatile environment:

Manish Sonthalia, VP & Fund Manager, Motilal Oswal Asset Management:

The pharma space appears to be good from the next two-to-three years’ point of view. So, within the large cap space if you want domestic niche play, you go in for multinational pharma companies like Glaxo, which has a very strong presence.

If an investor wants to focus on export-oriented names, one can go for Dr. Reddy’s or Sun Pharma, which are more inclined towards exports. And if somebody wants to look at the midcap space, then Lupin or Ipca are good bets within that space.

The US FDA problems will continue to remain and there is no easy way for the pharma sector as a whole, particularly with regard to regulatory pricing. Companies who play safe should do well.

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Gautam Trivedi, MD & Head of Equities-India, Religare Capital Markets Ltd:

One of our top picks in the cap goods space is Crompton Greaves. The stock has seen a low in the range of 80s and now it is around Rs 95-96. We are still very positive on the name and expect 50 per cent upside, but the fact is there is still limited interest in the cap goods space at this point. Cummins India is another top pick in the cap goods space.

If you look at the overall top line growth of FMCGs for the fourth quarter that just ended, you have seen a top line of anywhere from 12% to 15%. So all of that look pretty positive for the FMCG names and given where valuations are of the large caps, I prefer to buy Emami.

Nipun Mehta, Executive Director & Head-Private Banking, SG Private Banking India:

If we look at Sun Pharma and its product profile, clearly the growth is something that will sustain. I think Sun Pharma does continue to warrant an investment despite somewhat stretched valuations, but given the kind of certainty that is there in terms of revenues and profitability, it would warrant a buy on any correction that happens in the market or probably even at current levels.

Both pharma and the private banking space continue to be out favoured segments. We would continue to look at ICICI Bank probably in the private banking space and Sun Pharma in the pharma space.

Dipan Mehta, Member, BSE and NSE: