"The market is in the process of tiring out participants," opines independent analyst, Ambareesh Baliga on the market's dismal performance in the week gone by. The Sensex ended at 19484 and the Nifty at 5903 on Friday. The market also saw the psychological barrier of 5900 breaking momentarily.
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Baliga, however, says that the current market situation should be seen as an oppurtunity to buy. "The levels I see are possibly about 5,840-5,850. This should be a good buying opportunity for people who have missed out on this rally in the last so many months. I think it is a great time to start buying," he adds.
Below is the edited transript of Baliga's interview to CNBC-TV18.
Q: The week gone by was really dismal. The market slipped below crucial levels that were tracked by most traders. What kind of a downside are you hoping to see next week?
A: The market is in the process of tiring out the participants and that's exactly what is happening. With the sort of a crack which we have seen, people start talking of 5,700-5,800 on the Nifty. However, I doubt it will reach those levels. The consensus would be built up, however, I don't think it will reach those levels. The levels I see are possibly about 5,840-5,850. This should be a good buying opportunity for people who have missed out on this rally in the last so many months. I think it is a great time to start buying.
Q: Next week is quite heavy in terms of earnings. There is Oil and Natural Gas Corporation (ONGC), State Bank of India (SBI), Tata Motors, and Delhi Land & Finance (DLF). If there are one or two companies that will make you most nervous this quarter around, which ones would they be?
A: I think it could be SBI because that where again non-performing assets (NPA) issues could again arise. So, that’s one result, which I will look forward to, to see if there are any negative cues. ONGC, should have a good result this quarter.
Q: When you speak to people, do you get a sense that there could be more pressure in the mid-cap index compared to the frontliners? If you have to sort of pick one or two stocks in the mid-cap index to buy after the dip, which ones would you buy?
A: We have already seen a decent cut in the mid-cap stocks. So, one could see some more fall. However, I don’t think it will be substantial from here. There could be a fall on the index of about 4-5 percent, but not really beyond that, My pick this week is SKS Micro, which has shown atleast a turnaround after seven bad quarters.
The microfinance bill will also be one of the trigger for this stock. Despite these sorts of results, this stock has fallen in the recent past from around Rs 180-185 levels to closer to about Rs 130-133. So, I think at these levels downside is quite limited. I think one can buy at these levels and wait for again levels of about Rs 170-180, which I see happening in the next four to six months.
Q: Do you have any other ideas in the index movers? There has been lots that has corrected this week, be it from a public sector undertakings (PSU) banking space or from the metals space post numbers like Hindalco. Is there anything that you would want to buy on a dip?
A: I am looking at buying into steel. Steel Authority of India (SAIL), at current levels seems to have bottomed out. I don’t see much of a downside. So, I think I will buy SAIL again at the current levels with possibly a price target of about Rs 105-110. This is not a short-term target but in the next four to six months.
Reliance, which has been my favourite for quite a while, has dipped decently well in the past few days. It is a buying opportunity and I am looking at price levels of about Rs 1,050-1,060 again based on gas pricing which I see happening quite soon.
Q: Next week, apart from earnings, the inflation data will come out as well. From a market point of view, how important do you think that would be? Would it be responsible for dragging the markets lower if in case the numbers don’t come sub-seven percent, like many are expecting?
A: I don't think so. If this was closer to the Reserve Bank of India (RBI) policy, yes, I think it would have affected quite a lot. However, since the next policy is quite far away even if we miss the numbers this time I don't think the market will react very adversely to it.