Karvy Stock Broking's top sector/stock picks post rate hike

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Karvy Stock Broking's top sector/stock picks post rate hike

In an interview with CNBC-TV18, Ambareesh Baliga, Karvy Stock Broking, spoke about his reading of the market and his outlook.

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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 Nifty BSE | NSE 29/05/12 Are Mutual Funds betting on Nifty? Other Stocks in this news State Bank of India | S Kumars Nationwide |

In an interview with CNBC-TV18, Ambareesh Baliga, Karvy Stock Broking, spoke about his reading of the market and his outlook.

Below is a verbatim transcript of the interview. Also watch the video.

Q: The first set back is here in the form of a rate hike. How much ground do you think the market stands to lose because of it?

A: Clearly the way SGX Nifty points, we will be straightaway 1.25-1.5% down but the big question is whether we would hold on to that 5,180-5,200-mark. In case we hold on that, yes, I suppose the markets will still trade in this range of 5,200-5,300 over the next couple of days. But in case we break that then I suppose we would be in a new range again, which is basically 5,150-5,200-mark. We need to see how it trades in the morning at least in the first one-and-half to two hours because I do not think the market is spooked about this 25 basis points hike but it is the timing, which the markets will get spooked about.

Q: What is the sentiment like are people surprised and is the knee-jerk reaction likely or are they saying that we have expected this for the last three months maybe in place of April it came 20 days earlier or it is not a big deal, which way is the sentiment now?

A: I do not think it is the amount, which actually is creating an issue. It is the timing, which clearly shows that there is a lot of urgency as far as this is concerned and this could be the first in the series of hike. Earlier if people were expecting a 200 basis points rise over the next 6-8 months. That figure will now go up in people's mind to 150 basis points. That is what will create an issue.

But in case there is a knee-jerk reaction then that is exactly we need to watch out in the first one or two hours of trade because if it is a knee-jerk reaction and the market bounces back to be on 5,200 levels. We are still in the safe zone.

But in case it breaks and stays below then we have an issue on hand.

Q: Which of these rate sensitive sectors would you expect to react the most between banks, real estate and autos?

A: I think straightaway it would be the real estate sector, which anyways has been comparatively weak as compared to the rest of the market. The other sector, which is auto, which has been doing extremely well, being one of the most rate sensitive ones-that is the second one to suffer and thirdly it would be banks. 

Q: From the PSU banking, which ones would you be more wary of now? 

A: In fact, we are not wary about PSU banks as such. But yes, because of this it would correct. But I do not think there would be any sharp correction as banks are concerned. In case there is a decent correction we would look at buying State Bank and Punjab National Bank. I would utilize any sharp correction to buy into these PSU banks from a longer term perspective.