Nifty can break 5400 levels if all things go well: Baliga

Below is an edited transcript of Baliga's interview on CNBC-TV18. Also watch the attached video.

Q: What did you make of that inflation number because we have not seen any gung-ho reaction in the stock market? What is your expectation from the RBI later this month?

A: The inflation surely was slightly better than what the markets were expecting, but then, all eyes are more on monsoon than the immediate inflation figures. In case we have the monsoons still playing truant over the next two to three weeks, then I suppose we are staring at difficult situation and that in fact will make the inflation shoot up in the coming months. So, that is more important than the figures which we are seeing right now.

Q: If the monsoon does miss forecast in the month of July, what will the difficult situation imply? What kind of markers would you set out for the Nifty now?

A: I wouldn't like to try and speculate that now because we will have to see as to how the monsoon plays out and in between you also have the expectation of the reforms coming through next week. Basically, the way I would see it is that the next one-two weeks is actually make or break for the markets because in case you have disappointment on both the fronts, monsoon as well as the reforms front, then I think you can have a breakdown from these levels.

But again looking at the optimistic scenario, hopefully if things fall in place, you should at least look at the markets breaking above 5,400 levels. But till then, the way I see it is, we should be in a sort of a very tight range. At this point of time, I don't think anyone would like to take very clear stands whether to go short or long at this point of time. It is basically status quo for the next few days.

Q: What is your expectation of the diesel price hike? Do you think it will come post these presidential elections or will we have to wait for the vice presidential elections post August 7 and in terms of a quantum as well what would make the market happy you think?

A: I just hope not that they don't postpone it beyond the next few days. So, again the expectation is that there should be an announcement of diesel price hike this weekend or possibly early next week. The quantum, again I don’t think it will be Rs 5. The way people have been talking the market, it will be a small figure possibly Rs 2-2.5 just a token figure just to show that, yes, they are acting on what they are suppose to be doing in the last few months which they have not.

So, the increase maybe about Rs 2-2.5 and I suppose this also should be some sort of a trigger for RBI to act and possibly start reducing rates going ahead which is on July 31.

Q: Do you think we will see levels much lower than 5,200 or do you think this is it as a support this series?

A: I think this is it. We will be in a narrow band for the next few days and the downside from here could be possibly 20-30 points and upside also similarly maybe 40-50 points because I do not think anyone would like to take a very clear view in this week awaiting the announcement of reforms. So we would be in a band.

Q: What kind of levels do you think Infosys will touch because now it is below or it is at that 52 week low?

A: In fact, last Monday, when you had asked me, I had given you my target of Rs 2,200 levels based on the sort of poor results, which I was expecting. Now it is below that. The way things are I suppose we could see lower levels possibly closer to about Rs 2,050-2,100 based on the fact that there would be a shift at least the institutions could be shifting from Infosys to TCS because of that you could see another Rs 100-120 cut from here.

Q: It looks like we are going to close below that 5200 level and that was a level that is watched by most traders very closely. If we do see further downside from here which are the four or five stocks that look the most vulnerable from here on the Nifty?

A: The IT space looks vulnerable clearly, which has been weak for a while. Also, the realty and banking space are sectors where you could see a cut in case we see the markets going below that 5175-5180 mark.

Q: What about MindTree because that one’s had a good set of numbers? Do you expect more upside there or would that move in tandem with the rest of the sector?

A: We have already seen a very decent upside on MindTree since the last four-five months again based on the results, which the company has been churning out. But looking at the overall scenario, as far as IT is concerned, over the next two or three quarters there would be pressure so along with the rest of the pack I suppose from these levels it’s very much possible that MindTree also could correct.

Q: Just wanted to get you in on two stocks Lupin and Glenmark both of them have had either positive brokerage reports or some comments coming in from the management between these two anything you like?

A: Again from a longer term perspective clearly Lupin, but again Glenmark has those news, which keeps coming for example the milestone payments and things like that because of which I think its more of a trader’s delight, but as a investment clearly its Lupin.

Q: We were talking about individual stocks. How are you positioned on Exide ? What are you expecting this time and in general what is your thought on the stock?

A: This quarter the results may not be too great, but then I think we need to look forward for the next at least six months to a year when we expect the replacement demand to really boom and this again with the lead prices slowly coming down would be extremely good for Exide. So based on the results in case we see a correction from here closer to about Rs 122-123 levels I think it's a great buy at those levels.