Market expert, Ambareesh Baliga, spoke to CNBC-TV 18 about the fall in the market due to disappointing results by SBI and Tata Steel and why he still maintains a positive outlook on 5640-5650 level. He believes poor asset quality to be the main reason damaging the SBI and other PSU banks stocks. Further, Baliga bets on tea sector which not many people look at, Goodricke and Jay Shree tea are his top bets this Diwali.
Below is an edited transcript of Ambareesh Baliga's interview on CNBC-TV18.
Q: What did you make of the sell-off on Friday? How is the next week positioned?
A: I am not too perturbed with the sell-off which we saw. Again it was led by heavyweights like State Bank of India (SBI) and Tata Steel because of the results which came out. I still maintain that 5640-5650 is a good support level. I really don’t see the markets breaking that and next week, looking at the festive season, some sort of a bounce-back is possible.
Earlier, my target for Diwali was 5850 plus. Now that seems a bit difficult. But still I am quite bullish on the markets. I see the pace picking up later in the month. So sooner or later, we should cross 5850 levels, move towards 6000 possibly by the end of this month or early December.
Q: What did you make of SBIs numbers and where do you see the stock stabilize as we head into a new week?
A: The possibility of the asset quality really damaging the stock is quite high and that is exactly what has happened. I see the issue continuing at least for next 1-2 quarters because of which I am quite negative on SBI and other PSU banks. So I would say that possibly SBI could move more towards Rs 2000-2050 levels. At those levels one could take a fresh view. It could move to those levels in the next few days.
Q: Would you like to give any ideas or interesting multibagger options as we move ahead for Diwali?
A: Multibagger is difficult to say as of now, but surely one sector which not many people look at, is tea. I see this sector doing decently well over the next year, year-and-half. I see tea prices going up by 15-16 percent. So there are two stocks that I am looking at, one is Goodricke which is about Rs 139-140 right now. Second is Jay Shree Tea which is about Rs 106. Goodricke is going to the levels of Rs 180-200. Jay Shree should go to the levels of about Rs 160-180 in the next 6-9 months. So these are my two picks for Diwali.
Q: Once Diwali is over, how do you see the markets move because we do have events like the winter session of Parliament? On Sunday there is an important Greek vote for the bailout as well, how do you see all of this put together and for the rest of the series; where is the direction heading?
A: (Greek) bailout should in fact go through, that’s the way I see it. The winter session of Parliament could be a bit stormy as expected. But that is already there in the price as people have been expecting it for a while. It will be similar to what we have seen in the recent past. So I don’t think it will really push the markets down. Because of which, I am not bearish on the markets right now.
Again after that the expectation of budget will start building in from December-January onwards. So, the trajectory is clearly upwards, you will have FII money coming in sooner or later. So overall you could see the markets actually crossing 6000 levels in 2013 and by the budget I will not be surprised to see levels closer to 6300-6350.