Buy Tata Motors, Cairn India, Tata Steel: Gaurang Shah

Indian markets are trading with strong gains on the back of strength in Asian stocks and a firm rupee. Banking stocks have done well over the last few sessions as investors hope the Reserve Bank will cut rates to kick start the economy.

Gaurang Shah, Assistant Vice President of Geojit BNP Paribas Finance Services told NDTV Profit that investors could start select stocks as downsides are limited.

Edited excerpts:


Outlook on markets: The trading range is likely to be between 4,960-5,030 on the higher side and 4,800-4,750 on the lower side in the short term. A breakout or a breakdown from the current levels will depend on the news flow. The Nifty is trading at 4,900 levels and the maximum downsides are 5-10 per cent.

Bank Nifty has gained on rate cut hopes: We expect the Reserve Bank to cut repo rates by 25 basis points. Private banks also expect a rate cut. The build-up in bank stocks is in anticipation of a rate cut... All these gains would ease off if there is a status quo on rates.
Stock tips:

1) Tata Motors: Maintain a buy with a target of 360-375 in 12 months despite the sharp correction. Optimistic about the future of the company.
2) M&M: Buy with a target of 775-820 from a long term perspective.
3) Cairn India: Buy with a target of 375-430. The stock is trading close to its lows. The second phase in Sri Lanka is likely to go on stream soon. Crude output is likely to rise in Rajasthan. The rupee-dollar equation is in company's favour. Downsides are protected.
4) BPCL: Top pick among oil marketing firms. Buy when the stock corrects.
5) Ranbaxy: reduce
6) Tata Steel: Buy with a target of 465-510.