Nifty to move closer to 6000 by Diwali; bet on L&T: Baliga

Baliga is also positively surprised with the earnings this quarter. He remains upbeat about Larsen and Toubro (L&T) and expects the stock to move closer to Rs 1850 in the next three months.   

Here is the edited transcript of the interview on CNBC-TV18.

Q: It is an important fortnight for us, we have the F&O expiry, we have the earnings season and then to top it up, we have the Reserve Bank of India (RBI) policy next Tuesday. Are any of these triggers enough for the markets to be catapulted beyond the 6,000 level or do you think it is going to be a hurdle for us on the upside?

A: I think the first hurdle is about 5,800. The RBI policy would be most important for us to cross that hurdle and in case we have that cut of even 25 bps, I think that would be enough for the markets to cross that hurdle of 5,800 and move up towards 6,000 levels closer to Diwali, which again I have been saying for the last two-three weeks.

Right now, if you look at the results, I think most of the results are better than what the market was expecting. Even going ahead, I do not see results being much of a problem for the markets in the next one week. Also we have seen that whenever the market moves closer to that 5,650-5,660 range, clearly resilience is there and the market bounces back from those levels.

Q: In terms of numbers that we have seen until now, we have seen TCS , L&T and we have expectations from Cairn , HDFC also which came out with numbers, what was your top pick in terms of earnings this time?

A: L&T has been my favourite for quite a while and I have been recommending that for the last many months, it was a surprise when I saw the results. They are surely much better than expectations because I did not expect such good numbers this quarter. I was expecting much better numbers coming for December and March.

Looking at this sort of a performance, surely December will be a bigger surprise and I will not be too surprised to see L&T at closer to about Rs 1,850 levels.

Q: What are your thoughts on L&T because you have been recommending a buy on dips in the L&T stock but, now it is becoming increasingly difficult to get a dip on L&T, what did you make of the numbers and do you expect more upside on the stock?

A: The numbers were far better than what I expected. Although, other income or exceptional income resulted in better numbers for the stock, one should still look at the core income. It was clearly better than what I was expecting and getting a huge dip from here is very difficult.

Even a small dip to levels of closer to about Rs 1640-1650 is very much possible. After this sort of a run up you should look at buying at those levels because possibly in the next three months you could see levels of Rs 1850 plus.

Q: Do you track Polaris and do you have any views on how to approach the stock from here?

A: I don’t track Polaris. It will be difficult for me to comment on it but, I would say the IT pack will be cautious at this point of time. Inspite of the good results which we have seen from TCS and HCL Tech, this quarter would be far better than possibly the next 2-3 quarters which will come. From that point of view, these stocks could in fact top in the next few days. I think it is possibly time to even book out of HCL Tech and TCS.