Find out: How to play volatile stocks Sun TV, Punj Lloyd?

Excerpts from Bazaar 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 Sun TV Network BSE | NSE 30/05/12 Are Mutual Funds betting on Sun TV Network? Other Stocks in this news Punj Lloyd | Sonata Software | Infosys | HCL Technologies | Reliance Communications |

The Nifty continued to stay in the 5,500-5,600 range. Equity benchmarks remained flat in today's opening trade despite global markets closing weak. At 9:18 hours IST, the 30-share BSE Sensex was trading at 18,402, up 9 points while the 50-share NSE Nifty fell just 1.5 points to 5,525.

All eyes are on next weeks credit policy meet which will decide the short-term movement for the market, says Ambareesh Baliga, COO, Way2Wealth. In an interview on CNBC-TV18, he says the other event which may lead to a breakdown depends on what happens to the US economy once QE2 runs out.

Below is a verbatim transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. For complete interview watch the accompanying video.

Q: It's been tightly rangebound these last two days. What's your prognosis - are we going to break above 5,600 or go down below 5,300?

A: We have been talking of this range for a while. We will remain in that 5,350-5,400 and 5,600-5,650 for a while. The breakdown could actually happen only after we know as to what happens in the US post QE2. That is the most important event. We have been talking about a US slowdown when people have been talking about a recovery and I had clearly said it's possibly a mirage. So that's an important event to be looked at.

As far as the domestic issues are concerned, the immediate thing is the RBI policy which will decide the short-term movement for the market. For the time being it should be rangebound itself.

Q: The midcaps are coming back into action. Is buying interest coming in there?

A: There is some amount of buying interest. But it's more of a speculative interest because the largecaps are not really giving you that amount of swing which they were giving earlier. So the interests have shifted to the midcaps but again it would be quite a short-term kind of a moment. I don't really see an immediate bullish move in the midcap space. At least till August-September I do not see any upward movement as far as the midcaps are concerned.

Q: Anything you guys have started buying from infrastructure now?

A: We have been buying since a long time and currently we are completely full as far as our portfolio is concerned for infra. We are just holding out for the time being. Once the interest rate cycle starts moving down that's the time interest would again come back for infrastructure. At the current valuations we find it attractive and suggest if you don't have infra in your portfolio this is the right time to buy.

Q: What are you telling your clients to do on the two most volatile stocks over the last week, Sun TV and Punj Lloyd ?

A: On Sun TV we had told people to exit quite some time back because of the political connections and as to how that could affect the stock price going ahead and that's exactly what has happened.

As far as Punj is concerned, just like other infra stocks we had bought it earlier. But in the recent past we stopped buying because we are not sure as to how the results would pan out. The last results, however, were slightly positive. It shows at least some signs of revival. I would wait for possibly a quarter or more before I start averaging again.

Q: We have seen some sporadic action in technology companies like Sonata Soft and even Infosys is trying to claw back. Would you have backed anything in that space?

A: On Sonata Soft it's more rumour driven about acquisitions etc which is what is driving it. It's basically a trading bet for the time being. For Infosys, the day their results came up we had a price target of about Rs 2,800-2,825. In fact it touched those levels a couple of days back and we had bought at those levels. But again it would be more of an investment bet at this point of time at these levels.

Again the swings haven't been too great for having a trading bet in a stock like Infosys but the other IT stock where we are quite positive on is HCL Tech . Other than that we are not really looking at any other IT stocks.

Q: How much longer do you see this kind of strength or outperformance of the defensive sectors, FMCG and pharmaceuticals continuing?

A: As long as the market doesn't start moving up that outperformance would be there I expect it to be there possibly for a month and a half more because post that I expect that our market would start moving up. That's the time you will have the defensives, especially, FMCG underperforming.

Q: There is some buying interest that's been coming into the ADAG block. Anything you have been looking at for buying into over there?

A: Most of the stocks would just be risky trading bets for the time being. But one stock that we looked at is RComm where there are fresh talks of an sset sale. So that could keep it up but I suppose the upside would be quite limited to possibly Rs 113-115 but that's also a decent move from current levels.

If Rel Infratel is sold, RComm may rally 15-20%: Udayan