Arihant’s Gandhi Expects Cooling Inflation to Aid India Stocks

Anita Gandhi, a director at Arihant Capital Market Ltd., comments on the outlook for Indian equities. She spoke in a phone interview today.

The Bombay Stock Exchange Sensitive Index gained 0.7 percent to 19,417.21 as of 10:40 a.m. local time, rising for an eighth day and extending the biggest weekly rally in 20 months. The S&P CNX Nifty Index on the National Stock Exchange climbed 0.6 percent to 5,823.05.

On the market’s gains:

“The Nifty continues to rally on renewed interest from foreign institutional investors, who have turned net buyers from net sellers. We expect interest rates to not go up by more than 50-75 basis points in 2011. Moderate interest rate hikes and cooling inflation is driving investor interest, highlighted by the strong appetite seen for the recent State Bank of India bond issue. Also, the risks from global uncertainties, including the tsunami in Japan, are diminishing.”

On buying momentum:

“The Nifty is likely to expire with solid gains as funds continue their year-end buying to prop up their net asset value. We also expect buying momentum to continue into the start of the April derivatives contract series. However, fund flows during the later part will be influenced by quarterly earnings.

“We expect to see further buying in technology and bank stocks before the expiry of the March derivatives contracts today.”

On stock recommendations:

“We advise investors to buy Bank of Baroda (BOB), Bajaj Auto, Tata Consultancy Services and KPIT Cummins.”

To contact the reporter on this story: Santanu Chakraborty in Mumbai schakrabor11@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net