Correction may set in anytime, warns Ambareesh Baliga

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Correction may set in anytime, warns Ambareesh Baliga

The 50 bps cash reserve ratio (CRR) cut by the Reserve Bank of India has given a boost to the Indian market. However, Ambareesh Baliga, COO of Way2Wealth says, the rally may not last too long. 'I think we are more or less close to the top and the correction may set in anytime,' he adds.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Larsen BSE | NSE 30/05/12 Are Mutual Funds betting on Larsen?

The 50 bps cash reserve ratio (CRR) cut by the Reserve Bank of India has given a boost to the Indian market. However, Ambareesh Baliga, COO of Way2Wealth says, the rally may not last too long. 'I think we are more or less close to the top and the correction may set in anytime,' he adds.

Although Baliga is cautious on the market now, he says it will only be a correction and the market will not re-enter the bear phase.

According to him, any sort of correction should be utilised to buy. 'I would be looking at buying into banks. I would be looking at buying capital goods, autos, everything other than FMCG, realty and pharma,' he adds.

Also read: Be choosy while picking bank stocks, says Tata Invst Corp

Below is the edited transcript of his interview with CNBC-TV18's Sonia Shenoy and Gautam Broker. Also watch the accompanying video.

Q: Do you think people can still buy into this rally, given the kind of fundamentals change we have had in terms of the overall macro economic policy or would you still be cautious?

A: At these levels, I would be a bit cautious, especially from a fundamental buy point of view. I don't see this bump up, which we have got today, lasting too long because the rally in last two-three days seems to be have been a bit overdone. We were not really expecting a repo cut, but the thumbs up, which the market has given to the CRR cut, may not last too long.

Q: It has been quite an uninterrupted move in the market. But up until what level would you be comfortable? Beyond what point would you start getting cautious on the market now?

A: Even earlier we were saying that the markets may not last too much beyond 5,050-5,100. Because of today's policy, we have seen bump up beyond those levels. I think we are more or less close to the top and the correction may set in anytime. That correction could also be led by some of the results which we will see in the next few days. We have noticed, in the past few years, that the results which come towards the last seven-ten days tend to disappoint the markets as compared to the results which we have seen in the last 15 days. The next few results may not enthuse the markets.

Q: Things are really changing for the interest rate sensitives. We actually have the reversal in place now. Even if your call is the markets could have topped out for the moment and could decline, what would you be looking to buy on declines from the rate sensitives?

A: I have been maintaining all through in the last few weeks, it will only be a correction; we will not re-enter the bear phase. So, any sort of correction should be utilised to buy. Clearly I would be looking at buying into banks. I would be looking at buying capital goods, autos, everything other than FMCG, realty and pharma.

Q: We were talking about L&T as well post the numbers, but that stock has moved another 5% today. What is the call on the stock now? Where do you see it headed from here?

A: If you are talking of fundamental call over a longer period of time, over the next six-eight months or more, in fact we are looking at levels of about Rs 1,750 plus. But short-term call, I think it's been overdone. I think it's an over reaction to the results. Possibly we should again see the levels of Rs 1,225, sooner than later.