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Apr 13, 2013, 01.33 PM IST | Source: CNBC-TV18

How to play Infosys now?

Ambareesh Baliga, Managing Partner, Edelweiss Financial Services said he sees market at 5,400 on the lower side and 5,600-5,620 on the higher side for the next three weeks.

Ambareesh Baliga, Managing Partner, Edelweiss Financial Services said he sees market at 5,400 on the lower side and 5,600-5,620 on the higher side for the next three weeks.

Discussing IT giant Infosys ’s Q4 results, which disappointed the street, Baliga feels the market has more or less absorbed the shock. He advises investors to exit the stock if it stabilizes closer to Rs 2,500-2,600 by next quarter results.

He told CNBC-TV18 that he is bullish on Sobha Developers for this week.

Below is the verbatim transcript of his interview to CNBC-TV18

Q: Yesterday was hit a lot by Infosys numbers, but how do you think the upcoming week will pan out as we head into earning season?

A: The sort of a crack seen in Infosys is more or less absorbed . I do not think that will have too much of an affect on the market going ahead.

We are in the range of 5,400-5,600. So, anywhere closer to 5,600 will see selling coming in. At the same time, I see some amount of support at least from the domestic investor closer to levels of about 5,420-5,440 levels.

Q: You said the market has pretty much absorbed the disappointment with regards to Infosys, but for an investor who holds the Infosys stock, what should he be doing now?

A: He does not have too much of a choice, but to hold on for the time being. It is possibly we could see another Rs 100-125 more as a downside for Infosys, but then after today’s crack, I do not see a big crack from here.

If one has held on to Infosys for this long, one should just hold on and hope that by possibly the next quarter results it stabilizes closer to about Rs 2,500-2,600. That could be the level to possibly exit.

Q: What about you? I know it must be tough to give some concrete buy calls in a market like this, but still if you have to find some opportunities in this adversity, which stocks would you buy now?

A: There is one stock I will recommend this week from the realty space, which has been battered again in the past few weeks. I am picking up a stock that I feel is the best of the lot, Sobha Developers. It has a great past track record. They have delivered about 307 projects in about 50 million sq ft in the past so many years. It should be delivering another close to 8-8.5 million sq ft by FY15.

It is operating in ten different cities, where one has extremely good demand at the ground level unlike Bombay or Delhi. So, this is one stock, which I think can move to levels of closer to Rs 500, if one is able to hold on for the 12-15 months.

By FY15 we see net operating cash flows about more than Rs 1,000 crore. So, this could be one trigger for the stock. At these levels one can look at buying but yes, could see levels, which could be 5-8 percent lower than here looking at the way the markets are.

However, then one should keep some money to average out at those levels. One should just go ahead and buy at least some amount at the current levels.

Q: On Monday we have the inflation data that comes out as well and that is the more important parameter that the Reserve Bank of India (RBI) will take into consideration before deciding the policy in May, what is your expectation this time and how do you think it would affect the market?

A: The issue is that if it is favourable, we could have the markets moving up a bit, but I do not think it will start the next Bull Run. Whenever the market moves up, there is enough selling pressure coming in.

So, I do not see the markets moving too much beyond that 5,600-5,620 even if the inflation figures are in favour of us.

Q: What would your range be for the markets for the rest of the April series?

A: The range should be around 5,400 on the lower side and 5,600-5,620 on the higher side. I see this range for next at least three weeks.

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