Flows may push Nifty to 5600, but won't sustain: Baliga

Mounting political chaos and policy inaction continues to remain overhang for the market.

"Looking at what has been happening in the last couple of days and especially yesterday, we will clearly stall the reform process. We had that two months window sometime back, which is over. Going ahead, that is the biggest worry which we have," he elaborated.

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

Q: How much could the political turmoil restrict the upside for our market from here?

A: That is the biggest worry for the markets right now. Looking at what has been happening in the last couple of days and especially yesterday, we will clearly stall the reform process. We had that two months window sometime back, which is over. Going ahead, that is the biggest worry which we have.

Q: In the near-term is it possible for the Nifty to go upto that 5,600 kind of level that people are talking about you think?

A: 5,500-5,600 is possible clearly looking at the liquidity flows, but the question is whether we can stay at those levels for long which I doubt because the visibility is not there. That is the reason I have been telling people that it is possible time to book out when the markets are moving up.

Q: You have been watching Bharti so closely for many years, what would you do now, is this a good time to buy the stock or do you think you will get a better level there?

A: This is a great level to get into Bharti. People have been extremely negative on this stock for a while especially after the results. I don’t see much of a downside from here. We have tariff hike happening in broadband and we will have the tariff hikes across the table possibly by September-October that will be the next trigger.

African operations should stabilize possibly by December-January next year, which would also be a trigger for Bharti. Looking at the selling, you can see levels of about Rs 240-241, but then if you are looking at it from next nine-twelve months time frame; I think it is a great time to buy.

Q: Credit Suisse has initiated a coverage on a whole host of FMCG names justifying higher prices for these stocks despite high valuations, from the lot which one would be your best pick?

A: On overall FMCG I am clearly cautious at this point of time looking at stretched valuations, monsoon and rural income going ahead. All these will create pressure on FMCG.

But one stock which I still look at buying is possibly ITC. The levels Rs 230-235 should be used to get in. It is possibly the time one can go short in HUL and go long in ITC . I think that could be a good pair trade.