FMCG, Pharma only places to hide; avoid PSU banks: Baliga

Money in the market seems to be chasing very few stocks at the moment because there are hardly any sectors to hide other than FMCG and pharmaceuticals believes Ambareesh Baliga, Edelweiss Financial Services.

He expects Nifty to be rangebound with no major upside. Investors should stay away from PSU banking space because there is some more pain left for them. However, from privat sector space stocks like Yes Bank, Axis Bank, HDFC Bank are to be just bought and held on to, he added. Below is the verbatim transcript of his interview on CNBC-TV18 Q: How are you feeling about the market now, likely to remain rangebound or do you sense some pressure coming? A: It would be rangebound; I don't see much of an upside from here, possibly another 40-50 points move from here. At the same time there is a clear movement to safety because there are hardly any sectors to hide as of now other than FMCG and pharmaceutical. And possibly there are fewer managements, which the market trust. So there is a trust deficit right now because of which money is chasing very few stocks. Q: What do you do with the banks after the kind of fall that they have witnessed over the last one week? A: It is still time to stay out for a while because if you are talking of the PSU space there is still further pain left out there. You will still see the non-performing assets (NPAs) moving up because the economy is not really going anywhere. At the same time the sort of treasury income they showed earlier that is the story of the past especially for the next one-two quarters you will still see further pain there too. Q: What would you do with some of the smaller midcap names that have been quite active like Hexaware Technologies, Polaris Financial Technology, the Satyam twins? A: For the time being, I would more or less utilize them for trading because the rupee depreciation affect is already there in the price. Again the expectations from the IT space have moved up, especially post the Infosys numbers. Therefore, expectations are high but in case the delivery does not happen then downside risk is there. Therefore, from that point of view, I would utilize this space for trading with a stop loss. Q: Would you buy State Bank of India (SBI) at Rs 1800? A: About two months back I had a target to buy SBI between Rs 1800-1900 but looking at the developments which have happened in the recent past, it is better to wait for a while longer. We will see lower levels. Q: Would you buy Yes Bank now? A: The story in private sector banks is completely different. There is a very clear divide between the private sector and the PSU banks. Stocks like Yes Bank, Axis Bank, HDFC Bank after the results are to be just bought and held on.