Budget, Guj polls can take Nifty to 6800: Baliga

Independent analyst Ambareesh Baliga forecasts, on CNBC-TV18, that a rally is on the wings on the probable triggers of the Budget and poll-results in Gujarat. Baliga estimates that the rally will take the Nifty to touch a target of 6,800. However, the analyst maintains a negative outlook on the IT sector and is positive on metal stocks such as Tata Steel, Hindalco Industries and Steel Authority of India (SAIL).

Baliga is also not optimistic of a RBI cut in rates on Tuesday and explains that the market is in for some disappointment if it expects a cut in the repo rate.
Meanwhile, technical expert Sudarshan Sukhani of s2analytics.com advises investors to hold on to short positions and await a bigger market move before adding to volumes. Also Read: Mkt awaits RBI policy, metal stocks up; Sensex in red Below is an edited transcript of the analysis by Ambareesh Baliga on CNBC-TV18. Q: Are you still penciling-in a Christmas rally?
A: Yes, a rally is possible once Parliament session ends, the Gujarat election results are announced and hopefully some sort of positive news emerges from the fiscal cliff situation and that could in fact lead the next rally. It has been observed over the past few months that the market tires out before starting on the next rally and this is exactly what is happening now in the market for the past two weeks. Q: So if you are so positive about the markets, what is your upper-end target for the Nifty and do you think your upper-end target would be achieved in 2012 or will the market achieve it in 2013?
A: My upper-end target should be achievable by January when it will cross those 6,000 levels and move closer to the earlier highs. And before the Budget, I will not be surprised if those new highs are touched. In fact, rally will be liquidity-driven rally and the expectation from the Budget could take the markets to levels of closer to 6,700-6,800. Q: What have you made of the continued weakness in the IT stocks?
A: On IT, I have been negative for quite a while, especially in the last two-to-three quarters. Even this time around, I expect the IT sector results to disappoint and my call on most of the IT stocks is a 'sell'- Infosys, TCS and HCL Technologies. Q: What's the market chatter with regards to what the RBI policy might throw up and what have the markets factored-in at this point?
A: I am not expecting any sort of rate-cut this time. The commentary could be slightly positive indicating a rate-cut in January by about 50 bps. Q: Just in case a CRR cut of about 25 bps comes through, how much would be the market's reaction?
A: A 25-bps cut in CRR would mildly boost the market and maybe trigger a rally but I don’t think that is enough to take it to levels of 6,000 that is expected. Q: Any stock or picks for investors in 2013 based on your positive bias on the Nifty and the markets in general?
A: Other than the capital-goods infrastructure, auto and banking stocks, I have turned bullish on metals on which I was bearish for over a year. So in metal stocks, my picks include Tata Steel, Hindalco Industries and Steel Authority of India (SAIL). Tata Steel should offer a return of about 18 percent, Hindalco could go to levels of Rs 155-160 and SAIL should see levels above Rs 100. Q: Are you expecting anything in Kingfisher Airlines as well as the bankers consortium's meet today?
A: I don’t think anything of consequence will emerge from the meeting. Unless Mallya brings in fresh funds, I doubt a solution can be found to revive Kingfisher Airlines. Q: What is your opinion on HDFC Bank and HDFC? Would it be a 'buy on dips' approach for both?
A: Absolutely. It has always been a 'buy on dip' approach for both these stocks for the past many years and that continues because these stocks normally give you a return of anywhere between 20-22 percent year-on-year. So in case you see a dip, it is surely the  time to buy. Q: Do you expect any surprises from the RBI on Tuesday?
A: I don’t really expect any cuts in rates. In case there is a CRR cut, yes that would be a surprise for me but the market could be disappointed if it expects cuts on the repo rate too. Q: What is your expectation of the listing of Bharti Infratel (BIL)? Would investors make money after buying it at Rs 220?
A: Yes, I suppose the retail investors may just about stay afloat and could make returns of Rs 5-6. But institutional investors may not really make money at least immediately. I re-iterate that although that this is a long-term stock, investors should not expect to make money immediately.