Vibhav Kapoor sees Nifty in 4700-5200 range in 4 months

Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Nifty slips over 2%, breaches 4900 on Dubai's debt concerns Global mkts panic on Dubai's debt rescheduling 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 Tata Steel BSE | NSE 29/05/12 Are Mutual Funds betting on Tata Steel? Other Stocks in this news Reliance Industries | Ranbaxy Laboratories | Suzlon Energy |

Q: What did you make of Tata Steel's numbers yesterday?
A: The numbers were a bit disappointing. The loss was much higher than what we had anticipated. Things are going to improve a bit from there onwards because raw material costs are going to come down. The capacity utilization is going to increase as the markets in Europe and US stabilize. So this was the worst quarter for Tata Steel and the worst half year.

From here onwards, they could enter into a profitable situation. However, at current price levels, FY11, even with optimistic projections of something like Rs 45-50 per share, is discounted fully. So we don't see much upside from here. If the global situation turns worse or steel prices start going down then obviously there could be a downside to the stock.
Q: Reliance has gone ex-bonus. Do you see that stock struggling from here or do you see any out performance from Reliance from here?
A: It has actually been an underperformer for the past several months. The reason for this is that refining business has being weak globally. The oil and gas business is already fully priced in. Beyond FY11, there is not going to be much growth, unless they do this acquisition. A lot is going to depend there on how refining margins behave going forward, which is very important for the existing business. The court case is also one of the reasons. These things are to look out for as far as Reliance is concerned.

Q: Do you buy the Nifty at 4,900? Do you think it will take support here?

A: I don't think one should be looking at buying it immediately because earlier this could be a more protracted correction globally than we have seen in the last seven months. In terms of time, there could be a distinct possibility of the market coming down to 4,700-4,750. Today, being just a first or second day of this correction, it is too early to buy aggressively. So one would like to wait and watch for sometime. Only probably if the Nifty starts to come down further by another 3-4%, one should look to buy.

Q: Would you go into December with a higher amount of cash in your portfolio? There is a feeling that the best is behind us for 2009 and then there is caution for 2010 as well. For December, how would you position yourself?

A: If one had to sell, one should have been selling in the last few days or maybe in the last one month to one and a half months itself. From here, if you are a long-term investor, I don't think there is any need to get worried. Probably, it is not the time to go in for aggressive cash accumulation. So one should maintain the portfolio as it is. If you have some amount of cash, one could deploy that around 4,700 levels otherwise one should wait and watch how bad this global thing is going to be.

The real key is how the global markets behave over the next few weeks. If the global markets are going to go in for a very sharp or deep correction, then you might have some issue here. Otherwise, the Indian economy is doing well. There is a lot of liquidity. Interest rates are going to be low. In spite of this scare that we are having, after the correction is over, the markets will become healthier.

Q: How would you approach the two stocks­­-- Ranbaxy and Suzlon --which are up this morning?

A: Ranbaxy seems to be getting out of its bad phase for the last two years or so. It had a terrible time. So things seem to be improving for them. I believe that the stock is not cheap. So if you are a medium-term investor, it is probably good to buy at dips and accumulate the stock. There could be further upside going forward over the next 12-18 months.

Suzlon is a slightly different case. It has had many disappointments. The company has not been able to meet its promises to investors time and again. However, now they are starting to reduce their debt. So that is one very important issue as to how much debt they can reduce and how much improvement they can do with their balance sheet. The news about the company getting a new order is positive. So there could be a sense that the worst could be getting over for this company. If you are a long-term investor and believe in the management, then it could be a good interesting stock to look at and accumulate gradually.