Jun 07, 2013, 08.43 PM IST | Source: CNBC-TV18

Invest in IT on INR woes; banks ahead of RBI policy: Baliga

Ambareesh Baliga, Edelweiss Financial Services says we see the food inflation coming down and going ahead, we should have at least about 50-75 bps cut over the rest of the year.

Ambareesh Baliga, Edelweiss Financial Services feels that from a trader's short-term perspective, IT is one space to invest as there are talks on the street that it is very possible that the rupee could move towards 59-60 levels , so based on that there could be some sort of a short rally in IT.

Talking to CNBC-TV18, he says he is still bullish on the banking space as there should be rate cuts going ahead, looking at the way the monsoon pans out.

Here is the edited transcript of his interview with CNBC-TV18.

Q: It has been a tough time for the markets and we have seen the way the rupee has moved too. If you had to find some opportunity in this adversity either by buying some of these technology names or some of these textile names because of the way the rupee might positively impact them. Would you put any money there right now or do you think it is just sentiment?

A: From short-term angle, yes, I think IT is one space where one could invest because the way the rupee is going again.

There are talks on the street that it is very much possible that the rupee could go more towards 59-60 levels, so based on that we could have some sort of a short rally in IT. So that is one space where I think as a trader you could start investing.

Q: There is a lot of weakness which is seeping into the Bank Nifty. What would your view now be on the banks and would you still be positive on the private banking space?

A: We are still positive on the banking space overall because anyway we have seen a decent correction and we still feel that there should be rate cuts going ahead despite whatever the governor had commented in the recent past.

Again looking at the way the monsoon should pan out, we see the food inflation coming down and because of which going ahead we should have at least about 50-75 basis point (bps) cut over the rest of the year.

So, I think that will be one trigger for the banks going ahead. So at these levels we are finding that banks are worthwhile investing in. So, it is again the same old stock Bank of Baroda (BoB) and in private sector it is Axis Bank and HDFC .

Q: Would you have a view with regards to the auto stocks? We did hear about Maruti because of the inventory buildup they have stopped production for one day. How worried would you now be with the likes of Maruti, which has seen five straight months of poor sales data as well?

A: Writing was there on the wall for quite a while. Clearly, there was a slowdown in the monthly numbers, but still because of the way the yen was moving you had Maruti really going to its lifetime high.

But then at these levels also we find that it is slightly overpriced and again the expectation is that over the next few months atleast till the festive season starts you will have the monthly numbers still getting worse than where we are right now.

You should see some further cut in Maruti as well as the other auto stocks. But then surely at lower levels two of the picks would be Maruti as well as Mahindra and Mahindra (M&M). So, one should wait for the next possibly two-three months before picking up these stocks at lower levels.

Q: Just wanted a word on the whole macro situation and how exactly fundamental experts are reading it now. Now with a depreciating rupee you have the trade deficit data, which is again going to become a problem in terms of gold imports and oil imports and that would aggravate in terms of how exactly the Reserve Bank of India (RBI) could also move because they have mentioned that the current account deficit (CAD) continues to be the biggest threat to the Indian economy. Do you think that we are just stuck in a rock and a hard place at this point in time?

A: It seems to be like that, but unless ofcourse you have the crude moving down further from here again we are quite hopeful that crude could actually correct by atleast another USD 4-5, unless that happens, unless you have the gold demand going down, which again the Finance Minister has been pushing for that.

So in case that happens possibly we could see better days ahead. But in case we still see crude continuing at these levels, the gold demand is still continuing to be what we had seen in the last couple of months, I think we will have tough times in the next couple of months.

 

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