See 5600-5700 Nifty in next 2-3 months: Ambareesh Baliga

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The Nifty could touch 5,600-5,700 levels in the next two-three months, said Ambareesh Baliga of Karvy Stock Broking in an exclusive interview to CNBC-TV18. However, he was quick to add that the markets would again correct when the euro issue comes up.

Yesterday, the markets put up a stellar performance buoyed by strong cues from Europe. The Nifty closed at a new 30-month high of 5,441 while the Sensex gained 135 points.

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

Q: Do you think 5,400 have been taken out? Are we headed higher from here?

A: No question on that. It's very clearly taken off and it's a breakout in those technical terms. We are clearly headed towards 5,100 possibly 5,150 although we have been talking all the while that 5,400 is difficult to be taken out but yesterday it was quite clear. But the question is whether we are living in denial.

I think what we saw towards the end of 2007 about the subprime and we lived in denial and we saw the market moving up nearly 500-600 points on the Nifty that time. A similar sort of thing can happen now. Possibly in the next two-three months we could see 5,600-5,700. But the question is when the euro issue comes up, you will have the markets again correcting.

Q: If it gets to 5,500 though what becomes the new range for the market?

A: The new range right now could be around 5,400 to 5,600-5,650, if you are talking about next one to one-and-half month.

Q: Have you had a chance to look at Wipro's initial numbers-what have you made of it?

A: Initial number looks good, much better than what we had expected. At least for the time being we should be quite positive on Wipro.

Q: How would you trade the market now? Would you play along long for the moment with a stop loss because momentum might pick up after the 5,400 cross over?

A: From a trading point of view one, should stay long but one should wait for the Europe bank stress test results which should come out later. In case there is nothing negative in that then possibly we could have this rally continuing for a while longer.

From a trading point of view, one should trade long but from an investment angle I would still wait because I still believe possibly over the next few weeks if not the next two-three months, once we have some sort of an adverse news coming in from the Eurozone, we could see a correction, which could be much steeper than what we expected earlier because if the fall had happen from 5,200-5,300 levels it would be restricted to possibly 400-500 points. But if the fall happens from 5,600 levels it would surely be much steeper.