Diwali damaka: Experts bullish on Nifty; bet on largecaps

It was a rangebound session on Dalal Street today. The Nifty ended the day flat, down 2.5 points at 5,683. The Sensex closed the day down 13 points at 18,670.

The 'muhurat' trading session will be conducted for 75 minutes tomorrow (Diwali day), both on the NSE and BSE. Goodricke, Jayshree Tea and Talwalkars are market expert Ambareesh Baliga's top picks for Diwali. Baliga expects the market to move up for the next four-five months, atleast till the budget. "From that point of view, I would still remain in the frontline stocks like private sector banks. I still see a further movement there. Reliance would be a contra call. It has underperformed in the recent past. But I see that stock possibly moving up because of the gas pricing. That should happen sooner than later," he adds. In the pharma space, Baliga is betting on Dr. Reddy’s, Dishman and Shasun. In the auto sector, he is bullish on Mahindra & Mahindra. Meanwhile, Sudarshan Sukhani, s2analytics.com says 5,650 is a support level for the Nifty. "If this support breaks then we will start considering taking short positions. But my bias remains on the long side. My assumption is that sooner or later market will find support and bounce and eventually cross 5,730," he asserts. Also read: Shun PSBs, buy ACC this Diwali; USL can see Rs 2k, says SP Tulsian Below is the edited transcript of Ambareesh Baliga’s interview on CNBC-TV18. Q: What are your Diwali picks? A: I recommend Goodricke, Jayshree Tea and Talwalkars for the next one year. Q: What is your view on United Spirits? A: It is a very good deal for the shareholders. Rerating has happened. But I was expecting some selling from those people who had bought in the recent past. But long-term buyers were overwhelming on the stock today. At these levels, I think the best news is already priced in. I think the upside could be possibly about Rs 1,950-2,000. Q: As we head into the winter session of the parliament, do you fear that any kind of disruption or no movement on the key reforms, which have been spoken about, would trigger off a bit of a sell-off in the market or do you think this rangebound movement continues? A: I think that’s already priced in. What we saw in the last session of the parliament, I think something similar you will see in this session. That is expected. So, I really don’t see a major sell-off just because of the disruption in the parliament this time. Yes, reforms not going through could be a sign of a worry, no doubt. But I don’t see a sell-off. Q: There were multiple amount of data cues that came out today from the macro side, especially that IIP figure. That showed a decline of 0.4% this time. What did you make of it? A: IIP, no doubt, was shocking. No one really expected a negative figure this time. But people look at the silver lining. Because of that, the market has not really cracked after the data. Because of this, we could have a cut going ahead in January. So, the market is just holding on because of that hope. _PAGEBREAK_ Q: Nasscom mentioned that they are going to possibly have the IT industry grow at the lower end of the guidance of around 11-14%. What would your view be with regards to that particular statement and your approach towards IT? A: I have been cautious on the IT space for quite a while, especially the last two-three quarters. I continue with that view. Because of that, I still see most of the IT majors seeking lower levels than where they are now. I see the results not really up to the mark for the next two quarters. So, even at these levels, I not really suggest buying IT, whether it’s Infosys or TCS or even HCL Tech, which has done well in the recent past. But I think it may not really outperform in the next two or three quarters. Q: If one had to take a little more longer term approach in this market and wanted to do some portfolio building, what kind of stocks would you pick up from the forntliners, either with respect to attractive valuations or with respect to better earnings performance going forward? Is there anything that looks lucrative right now or is this going to be one long grind where the index is just going to move within a range and we won’t get too much stock specific activity from the frontliners? A: I am looking at the market moving up for the next four-five months, atleast till the budget. Beyond that, the visibility is not there because of the political scenario that could actually emerge. People will start talking of elections. There is no clarity. From that point of view, I would still remain in the frontline stocks like private sector banks. I still see a further movement there. Reliance would be a contra call. It has underperformed in the recent past. But I see that stock possibly moving up because of the gas pricing. That should happen sooner than later. So, these are couple of stocks and sectors that I will be looking at. Q: Overall, from the broader market, companies that released earnings in the past few days, any particular companies that stood out for you because a lot of them actually surprised on the downside? GVK Power and Infra came out with a loss, Suzlon, IVRCL, anything that stood out in your mind, in terms of a possible key disappointment or something which actually surprised you positively? A: Disappointment was there clearly with the infra stocks and the capital goods space, except L&T. It actually had a positive surprise. Among the other stocks, where I was positively surprised and would possibly look at buying is clearly Mahindra & Mahindra in the auto space. I really liked the results. In Dr Reddy's, there is still some more upside left from here. Q: How would you approach a stock like SBI now? It seems to have bounced back a little bit, but do you think the worst is over in terms of a weakness in the stock price? A: I doubt. I have been saying the NPA issue is going to bother them and the other PSU sector banks atleast for the next one or two quarters. So, SBI could come down to levels of closer to about Rs 2,060. At those levels, one could look at buying. Q: What do you think would be the next definitive trigger for the market? Would it be the parliament session or would it be something on the global front or we will be moving in tandem what exactly is happening with the US as it runs up to the fiscal cliff? A: Parliament, surely, will not be a trigger as such. I do not think it will be a negative trigger. Surely, it will not be a positive trigger for the market. But then the way I see it is because of the liquidity flows, which will again restart, we have been still seeing some liquidity flows, but I think that will increase going ahead. That itself should drive the market. Once we move beyond 5,800, we will have a lot of local participation. That itself will be enough to take it up. Q: On the subject of pharmaceutical names, what are your thoughts? Which are the top picks that you would advice right now? A: Among the top stocks, Dr. Reddy’s is one of my picks now, especially after the results. Among the smaller ones, which I have been recommending for the last close to four-six months, are Dishman and Shasun. Dishman has again started moving. It has crossed that Rs 110-112 levels. I would reiterate my target of about Rs 140-145. Shasun has been quiet, but I think it is still time to pick it up at these levels, closer to Rs 143-144. Q: Would you have a view on MCX, the stock is sitting at a new high today? A: It is because of their new stock exchange. One bit of caution is that it will not be as smooth sailing as when it was for their commodities market segment. I think the expenditure would be quite high for market making. So, I am a bit bothered about that, as far as the price is concerned. So, at these levels, I will not be a buyer. I would possibly look at booking out at closer to Rs 1,600-1,625.