Karvy Stock Broking sees a dull Dec series

Published on Thu, Nov 26, 2009 at 10:10 | Updated at Thu, Nov 26, 2009 at 15:15 | Source : CNBC-TV18

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In an interview with CNBC-TV18, Ambareesh Baliga of Karvy Stock Broking, spoke about his reading of the market and his outlook. Below is a verbatim transcript:

Q: For the November series, the Nifty is up 7.5%, do you think December can be encore or you are skeptical?

A: I have been skeptical for a while and even for December series again I am skeptical. After this sort of a move, clearly the December series would be quite dull. I don’t see so much of volatility as to what you have seen in the recent past. Clearly there is no conviction in the market at this point of time. Also, the liquidity also which is flowing is not enough to help us cross that hump of 5,150-5,180. So clearly I see the market falling under its own weight.

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Q: One of the big gainers is oil and gas, how are you approaching Reliance now and any thoughts on it going ex-bonus today?

A: We have been bullish on Reliance for quite a while although it’s been in that range of Rs 1,800-2,200, now the range will be Rs 900 to Rs 1,100-1,150 maximum. So in the short-term, one needs to play in that range but longer-term clearly we have our targets around Rs 1,300-1,400. Possibly once the acquisition is made and that goes through at a decent valuation then possibly we could see levels of Rs 1,700 ex-bonus.

Q: Would you buy Mahindra Satyam at Rs 90 after yesterday’s fall?

A: Not really, looking at the concerns which are there on the liabilities, I would surely wait a while longer. From a trading point of view one can look at buying it when it comes closer to possibly Rs 80-82 levels for a bounce back but you really cannot take a fundamental call on this company unless you know what is there on the balance sheet.

Q: There was a sympathy correction on Tech Mahindra, would you buy that?

A: I would tend to ignore Tech Mahindra as well at this point of time because even when it moved up, we felt it was too expensive. In fact our valuations were closer to around Rs 600-650, so surely at these levels I would not buy. It had just moved up mainly because of Satyam and that acquisition. I think even that should come down. I don’t know whether it will come down to levels of Rs 600-650 but it needs to correct much more from where it is right now.

Q: How would you play sugar now after the news flow of the last 24 hours?

A: We have been cautious on sugar for a while and even at this point of time we feel that the upside seems limited. Clearly although you have the sugar barons expecting sugar prices to shoot up much more from here, we had a contrary feeling that possibly the upside from here for sugar as such may not be too high. In the recent past, we have seen that when sugar has moved up 15-20% in prices, the sugar stocks have not reacted accordingly.

So at this point of time the risk reward ratio is not really favourable and being cyclical over the next possibly four-six months once the sugar prices start softening, it will have an effect on sugar stocks as such. I think the downside at this point of time is more than upside. So it doesn’t make sense buying into them at this point of time.

Q: Do you track Crompton Greaves or Areva T&D India?

A: We track Areva T&D and in fact we liked the recent results which have come out and we feel that from here the downside is quite limited whereas it can actually move up around 20-25% from the current levels.

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