Karvy sees Nifty at 4,400 in next 2-mths, suggest buys

In an interview with CNBC-TV18, Ambareesh Baliga of Karvy Stock Broking, spoke about his reading on the markets.

Below is a verbatim transcript of an exclusive interview with Ambareesh Baliga on CNBC-TV18. Also watch the accompanying video.

Q: Do you think we will hold around this 4,600-4,700 levels in this leg of the downslide? Do you expect a deeper cut before the Budget?

A: I doubt whether we will hold on at these levels because most of the people are expecting that 4,650 level to hold but just like the way it broke 5,180 on the top and did not have a blowout rally, went to 5,300 levels and came down. Similarly, we could breakdown below 4,650 levels, possibly try and touch 4,400-4,500 and after that we could look at an upmove.

For the next month and half, two months, we could see levels of around 4,400-4,500.

Q: Around the Budget,  do you think the market maybe trading as low as 4,500 or might that be the trigger that will take it lower?

A: Budget could be a trigger possibly for some sort of an upmove because we are getting into the Budget season with a lot of caution and fear. In case the Budget turns out to he a non entity like what we had seen in the past two Budgets, there is no major negative announcements as such. We could see some sort of a pullback from those levels. It is possible that we could be see 4,500 levels before the Budget and there could be pullback to the levels of around 4,700-4,800 post Budget.

The way I see is that the next two-three months, we would be in a range, an abroad range possibly of 4,400-4,800. It will take a while for us to break out of this range and possibly post June-July we could break on the upside.

Q: How do you approach the two commodities­­­­, sugar and fertilizer?

A: On sugar we have been cautious for quite a while and that has clearly shown up now. With sugar prices expected to cool down over the next couple of months, there is no way these stocks can move up. We could see Balrampur Chini below Rs 100. I suppose that should be possible over the next 30-45 days.

Normally before the budget you have a pre-budget rally, this time I think looking at the way the markets are at best fertilizers can outperform but on the way of out performing could be slightly lower than where it is right no because it may not fall as much as the markets could. You could get a negative returns from fertilizer stocks in the next couple of weeks.

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Q: Would you buy anything from cement now?

A: We have been taking a contrarian call on cement for a while. I was waiting for correction to get into this space again. So a stock like Ambuja Cement in case I get it closer to around Rs 92-93 levels that is one stock which I will buy. I am waiting for ACC to correct a bit more and Prism Cement which we got out recently at closer to Rs 50, we are looking at reentering at around Rs 42-43 levels.

Q: Had you had a look at the listing Jubilant Foodworks?

A: We found it a bit expensive but no doubt it will open at a premium. The question is whether it would hold on at these levels or not. People should utilize this opportunity and book profits on whatever they have got.

Q: Have you told your clients to start looking at buying in this zone of 200-300 points of the Nifty yet or you are waiting out for a bit?

A: One cannot really wait out in a market like this, especially when you are sitting on cash. At around 5,200-5,300, we were sitting on 60% cash. In fact, in the last couple of days, we have invested around 10% but still sitting on 50% of cash. We will be deploying this at every lower level because it’s not possible for one to wait out not possible for one to wait out on cash, especially on the way down. Although we are expecting the markets to go to 4,400 levels, it is possible that markets could bounceback from 4,600-4,650. So you cannot take a chance, in fact, at every level we are investing.

Q: Are you advising buying Inox now?

A: Not right now because I suppose there will be lot of explanation which would need to come from them especially after what Reliance Media has talked about that Rs 80 offer which they had made. So it calls for a bit of an explanation. Although it’s a good time for the Fame shareholders but for Inox one needs to be a bit careful.

Q: Any thoughts on how to approach this movie exhibition space now?

A: We are not tracking that very closely but especially after what we have seen over the past couple of days, this space is in for some amount of consolidation. Especially for Fame it is possible that this stock can move up still further looking at the controversy now which is surrounding that Rs 80 offer price. So it’s good for the Fame Shareholders for the time being.