Nifty may inch towards 5100; RIL a long-term bet: MF Global

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Nifty may inch towards 5100; RIL a long-term bet: MF Global

The market has been on a strong wicket since the beginning of 2012. Rajan Malik of MF Global says, the Nifty could inch towards 5,000-5,100 and find strong resistance there.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Reliance BSE | NSE 01/06/12 Are Mutual Funds betting on Reliance? Other Stocks in this news Tata Consultancy Services | HCL Technologies | Infosys |

The market has been on a strong wicket since the beginning of 2012. Rajan Malik of MF Global says, the Nifty could inch towards 5,000-5,100 and find strong resistance there.

He advises investors to be cautious. "One should lighten at higher levels and not get carried away by this rally," he adds.

Reliance Industries (RIL) is considering a share buyback on January 20. Malik is surprised by the news.

According to him, the news will put a floor to the share price of RIL. However, he says, it is hard to see the share moving just on the back of a buyback plan, unless and until it's very aggressive. "If you look at it from the larger context, maybe one-two years, it could be a stock that merits investment at the current levels," he adds.

His top pick in the IT sector is TCS . "They seem to have managed the entire scenario better than the peers," he adds.

Also read: RIL to mull share buyback on Jan 20

Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: TCS and HCL Tech declare their results yesterday. What did you make of them? What remains a top buy there?

A: Both results yesterday were a little heartening. It is nice to see that there are no pricing pressures and the body language continues to be stable and good. I would believe that both these stocks over the next quarter, until such time as Infosys issues its guidance for FY13, would continue to outperform Infosys. Our top pick in the sector would be TCS because they seem to have managed the entire scenario better than the peers.

Q: The market has moved with some ferocity over the course of the last few days. What have you made of it? What looks like upside potential, given the way liquidity has been moving the market as well?

A: Last week, we talked about a level of 5,000-5,100. We continue to maintain that the market could inch towards those levels and find strong resistance there. It is not surprising to see these kinds of moves. This is where we have been different this time than what we were in 2008. This time around the fall has been a little different. We have been falling. Every time the market has fallen, it has retraced the fall by about 60-70%. That is exactly what we have been doing this time around. So, this kind of a move is not surprising, especially when you come down to oversold zones and to levels which are perceived to be relatively inexpensive.

The broader moves likes the one we have seen this time are not surprising at all. But we must add a word of caution that one must not get carried away. It's best to wait for opportunities on dips rather than to enter on rallies because it doesn't look like this market could run away without giving investors an opportunity to invest at lower levels.

Q: Does it surprise you a share buy back from Reliance?

A: Yes, it does surprise us. I think this will probably put a floor to the price. But it is hard to see the share moving just on the back of a buyback plan, unless and until it's very aggressive. It is one stock that is largely been avoided by most of the large investors. So, they would want to get in. It would move in line with the Nifty.

Q: Is it a signaling mechanism to put a floor on the stock? Is it using up some of the cash on the balance sheet? Aside of the sentiment trigger this morning, what should investors takeaway?

A: The basic fact that seems to be coming out is that the Reliance management now says maybe the stock price warrants a look by the management itself and the company is very comfortable going and buying itself at these rates, given what the BP deal could do going forward. You have got negative signals coming out of the gross refining margins (GRMs) this quarter and maybe a little ahead. But if you look at it from the larger context, maybe one-two years, it could be a stock that merits investment at the current levels.

Q: The surprising value for a lot of people has been even on the infrastructure blue-chips, the way L&T, BHEL etc have come back, would you lighten up here or do you think there is more to come?

A: There could be a little more to come, given the fact that Nifty is not showing any signs of weakness. But it would be wise to lighten up your positions in a staggered manner here on. Given what RIL has done today, it could certainly be aid sentiment for the day atleast. It will probably keep the stock hovering around the Rs 750 or even higher levels, until details are known of this buyback scheme. But, overall, one should lighten at higher levels and not get carried away by this rally.