SENSEX NIFTY
Dec 26, 2012, 09.30 AM IST | Source: CNBC-TV18

Hold horses till cliff eases; bet on midcaps, RIL: Baliga

Market expert Ambareesh Baliga, in his analysis of the day’s market session on CNBC-TV18, advises investors to wait till there are signs of resolution of the US fiscal cliff.

Market expert Ambareesh Baliga, in his analysis of the day's market session on CNBC-TV18, advises investors to wait till there are signs of resolution of the US fiscal cliff.

However, Baliga dismisses increased concerns regarding the adverse impact of the non-resolution of the fiscal cliff on the Indian market, which in his opinion, is driven by internal consumption. The market expert suggests investors to bet on the midcap segment and Reliance which move upwards with the signs of resolution of the gas-prices looming over the horizon.

Offering a technical perspective on the day's trading session Sudarshan Sukhani of  s2analytics.com adds that the Nifty witnessed a no-trade zone today and is waiting for the Nifty to reach last Friday’s level of 5,850. "Trading is going to be difficult even if the levels are taken out. The markets are still risk-prone as with a holiday tomorrow it would be very difficult to carry a position towards Wednesday."

Below is an edited transcript of Ambareesh Baliga's analysis on
CNBC-TV18.

Q: What is your view on the markets? Would it be a good time to buy just on holiday dips?

A: I think investors should wait for some signs of progress on the fiscal cliff negotiations which could send the market moving in either direction. I think 5800-5825 is a good support, but I do not think investors should buy now and just wait for a day or two.

Investors could buy at higher levels on signs of a resolution which may push the market to actually break out of the earlier levels and move beyond 6,000 and to post new highs in January. So, investors should wait till December 27-28 and take further decisions.

Q: The expectations for 2013 are high unlike 2012 which started off on extremely muted expectations to post a 25-percent growth. Are you worried that there could be some disappointment in store as in January and February 2013?

A: I do not think there will be too much of a disappointment because the government is firmly on the path of announcing more policy measures, the pre-Budget rally, the rate-cuts. But post-Budget in April and May, the market might may dampen on worries from the political front as the general elections in 2014 begin to loom. But till then, I do not see too many roadblocks.

Q: What is your view on trading in the next couple of days? Concerns regarding the US fiscal cliff negotiation may possibly heighten from December 27. What do you think is will be the impact on the Indian markets?

A: In case negotiations on the fiscal cliff are stymied and result in higher taxes and spending cuts, there might be a kneejerk reaction across the globe that might send world markets coming down. But it is not a long-term negative for the Indian markets which  are driven by internal consumption that I suppose will continue. So the expected new highs will be delayed. But if a resolution is found, the markets will immediately post a major move upwards.

Q: In the current series, the Sensex and the Nifty posted a flat performance, but the Midcap Index has moved by 3.5-4 percent. Do you think the midcap segment could post further outperformance and what are your picks from the segment?

A: In a bull market, the midcaps normally perform much better than the large-caps. If the large-caps move up 10-15 percent, the midcaps surge 25-30 percent. So surely it is a segment to be focused on if there is widespread belief that there will be a new bull market from hereon. I would surely recommend stocks like Exide , Ceat , Himatsingka Seide , United Phosphorus and Mahindra Holidays .

Q: What is your view on Reliance in 2013?

A: I feel that there will be some resolution to Reliance’s problems with gas pricing thanks to the softening in the stance by the oil ministry on Reliance. The resolution and the 4G launch will be the two major triggers for the stock and I will not be surprised if to see Reliance move beyond Rs 1,000 to be a major contributor to the uptick in the Index.

Q: In 2013, do you think that there is an opportunity to bet on stocks where the promoter’s stake is above 75 percent and results in an offer-for-sale (OFS)?

A: It clearly depends on the stock and the quality of the promoters because an OFS does not generally mean that the stock will move up such as the case of Adani which began to correct after the issue. So I will surely not recommend such stocks.

Q: In a falling interest rate scenario, investors are putting money into gilt funds and the Association of Mutual Funds of India (AMFI) has reported an inflow of about Rs 2,000 crore in October and November in gilt funds. Do you see a lot of momentum in that option?

A: With the interest rates coming down, those who invest now in gilt funds could possibly gain going ahead and this could be an opportune time to start investing in gilt funds.

Q: Zee Entertainment has had an absolutely relentless from levels of Rs 116 to around Rs 223 on a YTD basis. Is that a stock which you would recommend to investors at these levels?

A: Fundamentally, it may not be advisable to invest at this point of time. Though there is momentum and the stock could move up by Rs 15-18, it has been found to be a bit too expensive at the current juncture. It was a good buy at Rs 190-195, but not at the current level.

Q: How much of an upside do you expect from the CARE listing scheduled for Wednesday?

A: I think there should be a very decent upside on CARE. I will not be surprised to see a 20-25 percent upmove from the IPO price considering the oversubscription and at the grey-market pricing. So it should be an extremely good listing.

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