Independent analyst Ambareesh Baliga estimates that the market will post a strong rally if the Budget is fiscally prudent and advises investors, on CNBC-TV18, that ITC is the stock to hold in the consumer segment.
Technical expert Sudarshan Sukhani of s2analytics.com says that the sluggishness in the market witnessed last week would not possibly continue for the Nifty at 5900. "At 5900, the market has two options- Treat this level as a consolidation and renew the decline or begin a relief rally. Since the markets are deeply oversold relatively, I would not be surprised if there is a relief rally lasting just a day or two."
Below is the edited transcript of the Ambareesh Baliga's analysis on CNBC-TV18
Q: The run-up to the Budget is turning out to be quite considerable with the expiry of the series and the announcement of the Q3 FY13 GDP. How exactly do you estimate the markets will trade up to February 28?
A: For the past few days, the market is beginning to tire out investors and that was clearly evident today. I think the next one-to-two weeks' run up to the Budget, the market will trade in a narrow band. I do not see the markets cracking from current levels unless of course, the macro data is pathetic.
The downside for the market should be about 5,840 and the upside could be about 6,000-6,050 and any move going beyond this level looks difficult considering the mood of the street.
But then a post-Budget rally is very much possible because the market is starting to face the Budget on low expectations. So, if the Budget is fiscally prudent, there could be a strong post-Budget rally.
Q: Do you have any short-term trading on some of these divestment hopefuls?
A: The stocks may look attractive, but before the issue most of these stocks will start to correct to a certain extent as evinced in the previous issues. So it does not make sense in taking a position right now. I suppose investors should wait for the issue.
Q: Any thoughts on Elantas Beck India?
A: The stock has been bought by investors for the last two years on the hopes of a delisting. With the company making a complete U-turn with an offer-for-sale (OFS), investors have started to lose interest and that has caused the major fall.
Q: ACC Cement faced aggravated pressure to fall by about 3 percent. Heidelberg Cement announced poor results as well. Do you think the cement segment is undergoing a cyclical downturn or is the fall more structural?
A: I think the fall is more structural and I am quite surprised as most cement companies reported strong results as against expectations of weak results. So I think now there is some catching-up at work because at the ground-level, the demand is stuck at single-digit growth. And the situation will continue for the next two-to-three quarters. So, cement is still a 'sell' and margins will be under pressure. For ACC Cement, I will not be surprised if the stock reaches close to Rs 1,050-1,070.
Q: The new banking licences are expected to be announced anytime this week and a lot of stocks have run up in hopes of receiving a banking licence. Is there anything that is still a good buy at this point?
A: L&T Finance carries a lot of expectations of receiving a banking licence, but I think it is still too early. I think only the guidelines will be announced. It could take 12 to 15 months for things to fall in place. So, this is not the time to start buying. Investors should still wait a bit longer.
Q: The IIP data for the month of December is to be announced on Tuesday. Any thoughts on what could be expected and whether it would move market?
A: I just hope it is able to move market positively. I am just hopeful that this time there will be something to cheer about.
Q: You track Dishman Pharma closely. What is your estimate on the company’s results that have been announced and how you would approach the stock?
A: The topline is more or less as expected. I expected the bottomline to be about 18.25-18.30 which disappointed. But the stock has started cracking from levels of Rs 120-122 to come down to Rs 95. So I don’t see any further downside on support from the results.
Q: In the second half of February, the trends of the market are dominated by Budget-related influences. In general, the pre-Budget trend tends to be bullish while the post-Budget trends are bearish. Do you see this being different this time around?
A: The pre-Budget market trend could be a bit flat. I don’t see much of an upside. But post-Budget, the market could actually touch these new highs that have been talked of over the last two-to-three months. I think that could kind happen post Budget.
Q: SBI is to announce its results this week. What is your estimate of this stock ahead of results?
A: Like I said last week, I will be a bit cautious this time on SBI’ results because of the NPA issue. I think I will just wait for the results and then decide. Right now, I will just stay out.
Q: Would you advise investors to buy Cipla which tumbled 8 percent last week?
A: I would not advise buying Cipla at these levels. I bought the stock at levels closer to Rs 300 and have already exited. So I will not re-enter at current levels.
A: Investors should be selective because there is a slowdown in consumer activity as clearly evinced by HUL’s dismal results. If there is one stock in the space which I would continue to hold it is ITC and not really Britannia.