``For every Re 1 employed in the software business, a company can hope to earn Rs 1.5-2 as profit. On the other hand, in an industry like steel or cement, every Re 1 invested gives a return of only 15-20 paise. And, in an environment where capital is scarce, an investor will obviously opt for a company which generates better returns on the capital employed.'' According to Agarwal, the wealth-creators in India are sectors like software, pharma, FMCG, media, internet providers as well as telecom and power utilities. ``In my opinion, more than software solution providers, investors should look atentertainment software companies. With increasing demand in the US, this sector should outperform mere software solutions providers,'' Agarwal said, adding ``Once, the management problem at Pentafour Software is solved, the stock could be a better bet than Infosys Technologies. At present, the low PE is because of the investor perception of the management. The FII entry is a sign that things are changing - the stock could be a good bet.''

Other good bets in the software industry are Wipro and CMC - the quality of their softwares is considered to be one of the best in the country. ``Once the software demand goes up in India, these companies should look up on the bourses,'' said Agarwal. MTNL, is another hot favourite with Agarwal, who feels the new telecom tariff will send the company's cash registers ringing. ``Rumours of a buyback are already evincing good buying interest as the company has a good cash-flow position,'' Agarwal said.

In the telecom sector, he said investors could target utility companiesas they have a good earnings potential. ``The only problem in the sector is the single customer phenomenon which keeps valuations down,''said Agarwal, adding that Birla Ericsson with its huge order book position should boost its earnings.

In the FMCG sector, Agarwal says, Colgate, Bausch & Lomb, Reckitt & Coleman, Proctor & Gamble and Henkel Spic are good picks at current levels. In the pharmaceutical sector, Agarwal is bullish on MNCs like Pfizer and Glaxo. ``I am not too comfortable with domestic pharma companies as most of them are into bulk drug manufacturing with only a recent entry into the formulations business,'' he added. For the market as a whole, Agarwal says the the medium-to-long term outlook is bullish. ``For the market, one government as is as good/bad as another; the only concern is stability, which is why I think in the short-term, the market will continue to drift until April 12. A definite direction will come only after that,'' added Agarwal.