Crossing 5200 is herculean task for Nifty now: Baliga

"Hopes can keep the market going for a while, but you require action at the ground level for the markets to sustain and move beyond," he said in an interview to CNBC-TV18.

Lack of policy action will drag Nifty closer to 5,000 in days to come, he warned. "People have actually lost patience with Delhi. Unless you have that action happening you really can’t see any further movement in the market."

Below is the edited transcript if Baliga’s interview with CNBC.TV18.

Q: It’s been a very quiet July series. What are your expectations for August?

A: If you look back, I have been saying that hopes can keep the market going for a while, but you require action at the ground level for the markets to sustain and move beyond. At that time we are talking of moving beyond 5,400 levels. But inaction on the policy side and political issues has broken the market.

We were saying that this week could be a break or make week for the markets and it’s been a break week. We have closed below that 5,200 levels. Crossing 5200 would be extremely difficult for the markets. Unless we really see action at the ground level I don’t think we could even cross those levels.

People have lost patience with Delhi. Unless you have that action happening, you can’t see any further movement in the market. It will drift down and I will not be surprised if you see levels of closer to 5,000.

Q: What are you expecting to hear from BHEL this time?

A: BHEL could be a bit muted. The street is expecting 5% or 6% sort of a rise in profits and in case it is slightly better you could see some sort of a bump up. But unless you really have policy action happening you don’t expect too much of a movement in either infrastructure or the capital goods space. I suppose it would be more or less like range bound.

Q: Yesterday all those stocks which are going out of stock Futures fell off quite sharply, 4-5% cuts. Is the adjustment done or do you expect to see pressure continuing on these names?

A: The pressure will continue for a while. There will be like unwinding in these stocks. But most of it has been done yesterday. So you could see a further fall of possibly either 2-3% more. Going ahead it will be driven by the financial performance and not too much by speculation.

Q: Historically what has the correlation been between weak rainfall and how much the market has fallen? In the past what is the kind of drop that we have seen on the Nifty during periods of drought?

A: It has that effect immediately on the markets, because as soon as we get to know that the monsoon is weak, it has sort of a sentimental impact. But the longer term impact clearly depends on how the inflation moves. My expectation this time is that there may not be too much of a correlation between the low monsoons and inflation, because we have had a bumper food grain production last year.

But again if we have more weak monsoon next year, that I suppose will have a bigger impact than what we will see right now. I suppose the impact will only be limited to possibly oil seeds and coarse cereals, rest of the commodities there may not be too much of impact.

Q: What do you do with yesterday’s star HCL Tech ? How much more upside can it justify?

A: Based on the results we have seen that upside. Now I suppose the overall issues of the IT sector will weigh on that stock. There will be profit booking at these levels.