Don't try to be brave and buy now; sell on rally: Baliga

Given the current volatile market situation, it is better to sell on rally because over the next few, traders will get a lot of opportunity to buy at lower levels, says Ambareesh Baliga, managing partner-global wealth management, Edelweiss Financial Services.

"It doesn’t make sense trying to be brave and buying into a market like this," he told CNBC-TV18. Also Read: Erratic rupee pain for mkt; stay with auto, IT: Antique Nifty could test 5,200 levels for a while and could find good support at that level, but how long even that will hold is the real question, he added. He advises traders to exit and get into liquidity whenever there is any bounce back. Below is the verbatim transcript of Ambareesh Baliga’s interview on CNBC-TV18 Q: Do you think it is becoming a sell every rally kind of market for the trader because that is the trade, which has been working out these last couple of weeks? A: This is what I have been saying for quite a while that people need to get into cash because there is no way this market can rally for too long and the rallies have become much shorter, like what we saw yesterday also. So, any sort of a bounce back should be utilised to sell and get into cash because I suppose over the next two-three-four months you should get a lot of opportunities to buy at lower levels. So, it doesn’t make sense trying to be brave and buying into a market like this. Q: Between Bharti Airtel and Reliance Industries, which one will crack further? A: It is possible that Bharti Airtel could crack further from these levels because rupee depreciation is more positive for Reliance than Bharti and at the same time we see more of margin pressures for these telecoms companies, including Bharti. So, Bharti at these levels could be a sell. Q: 5,500 was a level which held for a long time, almost a year. A break of that, you think will just break it by couple of 100 points, take it to 5,300 and no lower or do you think this break has more dangerous ramifications for the market? A: I think it will have ramifications for the market because 5,500 levels was a strong support level and fundamentals have changed for the economy. I think our policymakers are still in denial and they are not accepting the fact that we have crisis on hand. So, the way things are if no action is taken and we only have quick fix measures, which are actually taken negatively by the market, we will surely seek much lower levels and even in the past I have been saying that the broader markets have gone down quite a lot in the last couple of months and Nifty will do that catch-up. I think that catch-up is happening and as far as levels are concerned, 5,200 levels could be a good support level for a while but I do not know as to how long even that will hold. So, my suggestion generally to most of my clients has been that any sort of a bounce back which you see, utilize that to exit to a large extent, get into liquidity because once we touch 5,200 levels, we will again possibly see a bounce back. I do not know where it will take us to, possibly 5,350-5,400, but I do not think we can easily cross 5,500 levels unless we have real concrete action at the ground level by policy makers which looking at election around the corner I do not think our policymakers will be taking any long-term decisions at this point of time. Q: Talking about concrete action, some people believe it’s a good time to buy oil marketing companies (OMCs) with a trading view because the government will be pushed to the corner and then raise diesel prices and you may get a bit of a bounce there. Would you put money there?
A: I was quite positive on OMCs earlier but the way the rupee has gone right now, do we see diesel prices at about Rs 75, petrol prices at Rs 90. I do not think that is possible looking at even the way the inflation is going. I do not think that the government will allow OMCs to increase prices by that much. So, I do not think at this point of time one should be looking at OMCs because they will surely bear the losses.