Ambareesh Baliga, chief operating officer, Way2Wealth expects to see a correction of about 100-150 points on the Nifty if the central bank meets consensus estimates and cuts only 25bps. However, he sees the market finding support at 4750-4800 levels
Inflation data for the month of May will be announced today. According to a CNBC-TV18 poll, the May WPI is expected to rise by 7.4% against 7.23% in April. It would be the crucial factor in deciding Reserve Bank of India’s course of action in the upcoming monetary policy on Monday.
"In case the inflation figures are higher then expectation building up for 50 bps and CRR cut will become very strong," Ambareesh Baliga, chief operating officer, Way2Wealth told CNBC-TV18.
He expects to see a correction of about 100-150 points on the Nifty if the central bank meets consensus estimates and cuts only 25bps . However, he sees the market finding support at 4750-4800 levels.
On the other hand, if RBI obliges the market with a 50 bps interest rate cut, a CRR then Nifty might swing to 5,300-5,400.
Meanwhile, Baliga is not picking up any stock from the auto sector now. He is bearsih on aviation stocks and feels that the fate of these stocks hinges on FDI coming in the sector. However, he feels that the best play for a speculator would be Kingfisher .
Below is the edited transcript of Baliga’s interview with CNBC-TV18. Also watch the accompanying video.
Q: What you expect this RBI event itself to be for the market in terms of what the potential rally could be or conversely correction if there is disappointment?
A: Clearly 25 bps is already discounted and today in case the inflation figures are higher then expectation building up for 50 bps and CRR cut will become very strong. In case it doesn’t happen and they stop at 25 bps on Monday, then we could see a correction from there. It may not be a very steep one because we have a support at 4,750-4,800 levels.
So, there could be a correction of about 100-150 points on the Nifty. But, in case it meets expectations and we have a 50 bps cut, we have a CRR cut then we will cross this no mans land which I have been talking about in the last couple of days. We could head towards 5300-5400. But policy issues still remain. On the political side also there is uncertainty and that is concerning.
Q: What seems more likely to you, 5300 or back to 4800?
A: I would say more towards 5,300-5,400 because what I have noticed in the last two months is that inspite of all the adverse news surrounding us we have not broken that 4,750-4,800 mark. We have held on there. In the past couple of days whatever adverse news has come in for example the IIP data, clearly the market is looking for some silver lining in that.
Inspite of the data being so pathetic we are still looking at the positive side that possibly this could force the government to act, possibly this could force the RBI to act to cut rates. So, the market is more tended to look at the positive side today. In the last so many months we are tired of all the adverse news coming.
People are just waiting for some positive bytes. Even if you notice about 10 days back when we had those two positive bytes from Delhi, one from the Deputy Governor about the rate cut and the other from the Prime Minister and we saw a 200-250 point rally. The market is just waiting for some positive moves and I suppose we could see a decent rally.
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