What you should buy post mkt correction according to Baliga

He strongly recommends buying Tata Motors DVR immediately, and after a correction in the market, he advises to invest in infra, capital goods, autos and banks as a long-term initiative.

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

Q: Got a very sharp pull back yesterday. How are you approaching the month of March? What do you expect to see from the market?

A: There will be some nervousness before the election results and before the Budget. The markets are going to be volatile, so any sort of pull back like this, which we saw yesterday, could continue today. I would utilize it to book some profits, wherever I have not been able to book profits earlier in those sectors, and hold onto cash for a while. Wait for another correction; we could again see levels of about 5200-5225.

Q: Any thoughts on the twin combination of Tata Motors and Tata Motors DVR? Are you recommending anything for clients on that?

A: Last couple of months we have been recommending people to buy Tata Motors DVR because there was no logic for this stock to be quoted at 45-50% discount. We also saw a 52-53% discount. If you see globally, we have DVR’s even quoting at a premium. If you look at Volkswagen DVR, which is quoting at 10-11% premium, most of the other DVR’s are quoting at a 10-15% discount. However, it is only in India that we see DVR’s quoting at 50% discount, 60% discount in case of Jain Irrigation. People have to be educated on this and because of which we came out with a report about two and a half or three months back saying that, it has to normalize and this is not normal. 45-50% is not normal especially for those companies where the management is strong.

There is no question of a takeover then I suppose the discount should come down to 20%. Nevertheless, I do not think it will come down so soon, possibly, we should settle at these levels of about 40-43% for a while and then over the next couple of months we should see it closer to 30%. Although, ideally it should be 15-20%, but looking at the past track record we should settle at about 30-32%.

Q: Any Budget buys list that you have going out ahead of the Budget. Anything that you are recommending increasing exposure to?

A: Not really from the Budget point of view but then once we see a correction I will again get into infra, capital goods, autos and banks to a certain extent. But these are those long term bets and not from the Budget point of view.

Q: Any thoughts on ONGC, whether you think the stock may react higher from here post that auction happening.

A: We were expecting the flow price at Rs 270 but when they have announced at Rs 290, I suppose the stock can move up another Rs 10-15 from here. We should remember this also sucked out liquidity from the market to a certain extent. The other pointer is that the government did not want to wait for the election result, so they are in quite a hurry to have this issue through.