This week, TopNews Stocks editor Neeta Aurora interviewed Technical Analyst Mohinder Kumar about his view on Stock Markets trends for the next six months. Below are the excerpts from the interview.

Neeta: Indian Stock markets faced correction in late January this year. What was your recommendation to clients?

Mr. Kumar: The markets valuations were over-stretched. Many technical analysts started feeling nervous about the fast rise in stock prices in certain sectors. Power Sector, Hotels, Fertilizers and Banking and some old economy stocks had witnessed quite a run. A sharp correction was expected at higher levels. We were suggesting our clients to book profits and stay away from news driven stocks. Some counters were trading much higher than fair valuations based on fundamentals.

Neeta: Which sectors will perform well in future as per your expectations?

Mr. Kumar: Technology counters with strong fundamentals should perform well over next 6 – 12 months. Most of these companies have already offered a growth of 20 -35% compared to January 2008 levels. Pharmaceutical stocks are looking good as well. Ranbaxy Labs, Cipla and Dr Reddy didn’t participate in the last rally. Investors with low-risk appetite can enter these stocks as they are safe compared to other sectors. Some select FMCG companies are good for long term as well.

Neeta: Can you name some specific stocks from Technology Sector?

Mr. Kumar: Satyam Computers is a good pick in price range of 450 – 490. The stock had major resistance at Rs 482 and it has crossed that. If the global cues are positive, investors can book decent profits. Among frontline stocks in Technology, Infosys Technologies and Wipro are fairly priced. Mastek is good stock for long term. The volumes in the counter have been low for past few months. The stock can offer decent returns as the company is among major players in its sector. Polaris Software is a good stock. We were recommending the stock to our investors. However, after the recent result, the stock doesn’t look that attractive.

Neeta: What is your view about Tech Mahindra?

Mr. Kumar: The stock is good for investors looking for 20 – 40% returns over next 2 years. We suggest entering the counter on declines. The company has shown consistent performance and future guidance is good as well.

Neeta: In Pharmaceutical sector, what is your view about Orchid Chemicals?

Mr. Kumar: Orchid Chemicals offered almost 3 times return in a very short time. The company has strong fundamentals but the price increase was too much to justify the fundamentals. Investors should stay away from news driven counters. It is good to enter these stocks when the rally starts. As stock price rises so fast, investors should be cautious and should enter the stock only on declines. We do not recommend investors to enter this stock.

Neeta: What is your view about stock markets for next six months?

Mr. Kumar: We do not see immediate signs of revival in the counters which have lost significantly in the recent correction. As Oil prices are touching all time high, markets may remain under pressure. Global signals aren’t very strong. Markets will depend largely on Global indices.

Detailed interview can be read in the upcoming issue of TopNews.