In an interview with CNBC-TV18, Ambareesh Baliga, Managing Partner-Global Wealth Management, Edelweiss Financial Services, shares his views on the market and gives his call on various stocks.
Below is an edited transcript of his interview on CNBC-TV18.
Q: We have put to an end a very good April series. We saw some amount of profit taking at the start of the May series. How would you approach the rest of May? Would you sell and go away or would you hang on?
A: Like I have been saying for the past few days, more or less we are close to the top and moving beyond this requires a very big trigger. It could be from Reserve Bank of India (RBI), where we have already discounted a 25 basis point (cut). In case it is much higher than that, only then we could really see the markets moving up. Otherwise, I think the next trigger after that is monsoons, which is quite far away. So from these levels I do see some amount of correction. I don’t really see a major crack, but I do see some amount of correction from these levels.
Q: How would you approach the banking space now because I am sure investors are in a quandary? On one hand, you have had really good earnings coming in from all the private sector banks, but on the other hand these stocks have run up so much that you would fear putting more money at this juncture. Would you buy anything now?
A: From a trading point of view, possibly I will buy for the next one week for the run up to the policy. But then, post that, unless there is a major surprise you may not see too much of an upside for the banking stocks or the market. So possibly closer to the policy date, I should book out to a certain extent.
Q: You have a buy in the Non Banking Financial Companies (NBFCs) space as well, tell us about that?
A: Bajaj Finance is my buy call for this week. In fact a very well diversified portfolio bouquet and they are across close to about nine business lines, have about 225 points of sale and close to about 4,000 associates. Again, looking at the way they have been able to really bring down the non-performing asset (NPA), NPA levels are extremely low, closer to about 0.3 or so at the net NPA level and looking at earnings per share (EPS) of about Rs 135 for FY14 and a book value of closer to about Rs 860, which should be achieved by FY14. I think at these levels there should be a decent upside. In fact we are looking at levels of closer to about Rs 1,450-Rs 1,475.
Q: The biggest gainer last week was Maruti Suzuki with a 10 percent gain post those numbers that nobody could believe, they were quite good actually. Would you have more faith in that stock? Would you put more money there? Or do you think after hitting a 52-week high it is sort of going to plateau?
A: I surely have faith in the company and the stock. But at these levels despite really surprising results, I think it is a bit too expensive and looking at the sort of numbers, which will come on a monthly basis over the next three to four months, I think that could be disappointing to a certain extent and that should give you a buying opportunity at lower levels. So surely, I will wait for a correction to buy this stock.