Vivek Mahajan of IL&FS Investmart says that the pain is still not over in the market though India's story is strong. He says that fundamentally, there is nothing wrong, as this is more to do with technical factors.

He adds that the market is quoting at approximately 13 times the current year earning and in cash markets, prices have fallen so much that it makes sense to start buying in small ways at the current level.

He further adds that cements and metals are the sectors, which could recover fast because they have fallen significantly.

Excerpts from CNBC-TV18's exclusive interview with Vivek Mahajan:

What is your expectation? The rebound that we are seeing today, 250-point recovery from the low, are you convinced?

The pain is still not over in the market, though India's story is very much on. Fundamentally, there is nothing wrong, as this is more to do with technical factors.

It all started just before the F&O expiry in the international market and people got trapped badly in the F&O space, there were phenomenal losses over there. So it may be sometime before it recovers; maybe today the panic bottoms to 9,200, which should be the final low.

I do not know that is correct or not, but stock-specific buying should be done at the current point in time. The market is quoting approximately 13 times the current year earning and in cash markets, prices have fallen so much that it makes sense to start buying in small ways at the current level.

What do you like about Bharat Bijlee [Get Quote]?

Today Bharat Bijlee is at Rs 910. But this company is sitting on investments of Rs 250-300 per share that makes it Rs 600. This company should be reporting an EPS near about Rs 70 in the current year.

This stock is available at nine times the current year earning. If one has to look at the other stocks in the sector like Siemens, ABB or BHEL, they are going at 20 times the current year earnings.

So, definitely this is one of the cheapest stocks in the sector and the company is also doing well. So it could be a value buy. No doubt, the recovery may take sometime, but it will be a good buy around Rs 800-850 levels.

Your other pick is Indo Asian Fusegears. Tell us, what are the arguments that are in favour of it at current levels?

Indo Asian Fusegears has corrected from a high of Rs 300 level, which we saw in early May to something like Rs 100 today. It is not that the company is not performing, it is doing well.

The company is bringing some expansions, which should be up and running in the current quarter. The company's export was in the region of Rs 15-20 crore (Rs 150-200 million) last year and for the current year they are targeting Rs 75 crore (Rs 750 million).

A big growth is expected in switchgears. Looking at the growth in the entire commercial space area, this company also stands to benefit on that account.

The stock should be reporting an EPS in the current year, in the region of Rs 35 or thereabout. It is quoting at just about 3-3.5 times expected current year earnings. The promoter group itself is picking up a stake in the company at Rs 160.

It is still at a significant discount to what price the promoter is putting the money at. I would definitely go for Indo Asian Fusegears. The holding period could be high, but the stock is cheap at the current level.

What are your picks from the front liners?

Cements and metals are the ones, which could recover fast because they have fallen significantly. I like ACC, Gujarat Ambuja [Get Quote] Cement and maybe Grasim Industries [Get Quote]. On metals Hindalco Industries [Get Quote] has taken a major hitting, one should take a look at it, at the current level and at every decline. The company should be reporting a record performance in the current quarter.

One quick word on what signals are you really picking up. On the F&O side we did see some amount of covering of the short positions. At the moment on the ground, what are you seeing? Is the worst over on that front or is it too early to call?

I think it is too early to call but the biggest problem is that the investors were not having shorts in the market because everyone was so bullish about the Indian economy.

As a result, since there was a deficit of the short position in the market, there was no short covering.

No doubt, some short covering started getting created off late, but that is not sufficient to give a pull back to the market. It is too early to comment, the market may be at 9,200 in case it sustains the panic bottom, it will be good but the recovery will be slow and steady.

Any disclosures

I and some of my clients maybe having exposure to all these stocks that we have spoken of today.

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