Ambareesh Baliga, Managing Partner-Global Wealth Management, Edelweiss Financial Services advises investors to use the current market rally to exit the market. He feels breaching 5,550-5,600 decisively would be tough for the Nifty.
"If there is a decent rally in banks look to exit that sector. It doesn’t make sense getting into the market today," he told CNBC-TV18.
Below is the edited transcript of Ambareesh Baliga’s interview with CNBC-TV18
Q: How has the market reacted to the new Reserve Bank of India (RBI) Governor’s first day and because of the sentiment upmove how much do you think the market could move today?
A: The market will cheer Raghuram Rajan arrival and today we will have another 100 points rally, but for the market to cross 5,550-5,600 decisively, it would be difficult. Because whatever said and done I do not think the sentiment will change immediately. He can talk of the market to a certain extent, but unless things change at the ground level, which I do not see changing at least in the immediate future, I do not see a sustained rally. My advice would still be the same; those who have missed out on the earlier pullbacks, utilise this and get into cash to a certain extent.
Q: Today will you buy anything?
A: Nothing. I would look at exiting to a certain extent especially banks. If we see a decent rally in banks I would look at exiting because once it opens with a gap you hardly have anything any upward move from those levels. So, it doesn’t make sense getting into the market today.
Q: Will all the banks are sell on rally for you or are you picking up some nugget, which has been sold considerably or which will benefit more from Rajan’s announcements?
A: The public sector undertaking (PSU) banks would be a sell on rally. Even if you look from pure valuation angle then most of the banks and the market overall is looking extremely attractive, but it would be worthwhile buying now if you see some green shoots by November-December, which I do not see happening.
Unless you foresee a turnaround in the near future, it does not make sense buying right now from a longer term perspective. So, my advice has been to investors and not to traders because the last two months has been a great time for the swing traders but surely not for investors. I have been saying utilise any of these upmove to exit because the next two-three months there will be lot of pain and should give lot of opportunities to buy most of these stocks at lower levels.
Q: In the last couple of days we have seen some participation come in from Bharat Heavy Electricals (BHEL). It has moved back to Rs 130 levels. Would you touch that stock given the history BHEL is a strong avoid and also Larsen and Toubro (L&T) that is now sub Rs 700?
A: If you give me a choice between BHEL and L&T then L&T is a much safer stock to buy and to have in the portfolio. BHEL is more of a traders’ bet right now the way it has cracked surely you will have some amount of bounce back on any sort of positive news. Right now we are talking of import substitution because of which we are seeing this bounce back in BHEL but do I see BHEL at Rs 160-170 over the next four-six months. I do not think so. The upside will be capped about Rs 140-145.