New year 2013: Market may give 15-18% returns by Feb-end

The Indian market ended the last day of 2012 on a flat note. The Nifty ended at 5,905, down 3 points or 0.06 percent. The Sensex closed at 19,426, down 18 points or 0.09 percent.

But, for the year as a whole, India was the best performing market in Asia. The Nifty and Sensex rallied over 25 percent in 2012. In an interview to CNBC-TV18, independent analyst Ambareesh Baliga says he has been positive on the market for a while. "Trigger points in January can take the market to new highs. So, I am positive right now," he elaborates.   According to him, the next two months could give about 15-18 percent returns. "If you have missed out then get in now before it's too late," he suggests. He will put his money in private sector banks and autos. Must read: Will 'safety first' approach earn good returns in 2013? Below is the edited transcript of his interview on CNBC-TV18. Q: Do you have a positive bias as we enter into the New Year? Do you think the triggers, which are lined up in January—RBI policy and earnings, have the fire power to take the market beyond the 6,000 level or will that be top for now? A: I have been positive on the market for a while. You have those trigger points in January that can take the market to new highs. So, I am positive right now. Q: There has been a strong rally in the yields today, all the way to the levels of around 8.03 percent. Would you have a view on that? What could be helping the yields rally so much? A: This could be the last rally. Going ahead, we are expecting a rate cut, possibly towards the end of January. So, I suppose this could be the time to stock up the long-term debt, as far as the investors are concerned, because the yields will start moving down going ahead. Q: If there is an expectation of a rate cut, what pocket would you put your money in right now? Would it be autos, banks or do you think banks have already seen the best of their run this year? A: Banks can still move up more, especially private sector banks. I will put my money there. Auto is another space where there is still a decent amount of upside. So, I will put money in these two pockets. Q: Bharti Infratel, how exactly have you read the news with regards to being included in the FTSE Global Index? A: That has been the trigger. For this stock to again go beyond that Rs 220 level is going to be quite difficult. Any stock, which opens lower, stays there and would find it quite difficult to go beyond the issue price. So, that would be the top. Q: What would your advice be to retail investors who are looking to participate in this market? The argument is that despite 2012 seeing 25 percent returns, 2011 the market was down about 24 percent or so. So, net-net, equity markets have not yielded returns for the last many years. Do you think the time is right to get in to the market now or is this still going to be one off volatility where not too much of an upside is expected beyond these levels? A: I would say you missed out on 2012, don’t miss out on 2013. The next two months could give us about 15-18 percent returns. So, surely if you have missed out then get in now before it’s too late. Q: After the 15-20 percent returns, what happens for the rest of the year? Can we repeat ourselves or maybe even sustain levels of 15-20 percent gain from the 5,900 mark that we are seeing now? A: That is quite difficult for me to say right now. As far as political concerns are concerned, that should happen possibly post April-May, if there is clarity there then I suppose the bull run will continue and you could actually see highs, which I was talking of, possibly closer to about 6,700-6,800. _PAGEBREAK_ Q: Going into 2013, how would you approach high beta? Stocks, which have actually not shown that much of an upmove, like Suzlon, Tulip Telecom and OnMobile Global, would those be opportunities or would those be complete avoids in 2013? A: Risky bets, no doubt, but surely they are opportunities. For example, Suzlon, if you look at the business, it is continuing to look quite favourable. That could be one dark horse. Tulip has a huge issue with the balance sheet. If that is sorted out, it could be a big opportunity. We have seen a decent cut in both these stocks in the last two years and Tulip, especially in the last six-seven months. So, surely opportunity is there, but it is quite risky. So, it should form only a small part of your portfolio. Q: What about rupee? A: I am not so bearish on the Indian rupee. Infact I see the rupee closer to about 50-51 and not 60-62. That is where my views differ. At the same time, the inflows, which we will see, will also help the rupee sustain at much better levels than where we are right now. Q: What are your thoughts on Infosys? Is this a good time to pick up the stock or do you see the stock languish at these levels for a while, until there is some fundamental improvement in news flow? A: Not yet, another two or three quarters could be bad for IT space. Infosys will continue underperforming. I see levels of closer to about Rs 1,975-2,000. One should also look at exiting HCL Tech and TCS where we have seen decent performance in the recent past. However, from December quarter onwards, I see even those underperforming. So, it is still time to get out. Q: Banks have been the best performers this year and they top it up on the last day of the trading year as well. Are there any banks that catch your attention in terms of a buy idea from hereon? A: We are quite bullish on Development Credit Bank (DCB). But among the larger ones, the buys are still Axis Bank, HDFC Bank, State Bank of India (SBI) and Bank of Baroda. These are the four buys on the bigger names. Q: In a couple of hours from now we will get to know more about the fiscal cliff negotiations. With the people that you have interacted with, what is the feedback that you are getting? Will this trigger just be a one-two-day event that would be forgotten or do you think it will have a more deep rooted impact on markets like India? A: If it is negative then it will last just for a few days, two or three days. We will have a knee jerk reaction, possibly go more towards that 5,800 levels and then from there we bounce back. In case it is positive, we will clearly cross the 6,000 levels. That will actually help the momentum. We could see the new high quite soon. Q: Any gems that you would want to identify for us as we head into 2013? A: The same old stocks, which I have recommended in the past couple of weeks, like United Phosphorous. I see the stock possibly going to about levels of Rs 170-180. Himatsingka Seide, a turnaround story, I am looking at levels of about Rs 60-65. Mahindra Holidays, a lifestyle stock, which has just started moving in the past few weeks, but I still see levels of closer to about Rs 420-430. Q: Any sort of things or themes that you think that could play out in 2013? It has been quite eventful, if we look back and look at all the events that have taken place. Anything you would expect in 2013 specifically? A: Like I have been saying in the last two-three months India building story, I think that is what will play out with government awakening, which we saw in the last three-four months. So, infra, capital goods, banks and autos will actually play out in the next two-three months. That’s the space to be there in. Q: Do you see more upside in real estate counters? A: Real estate again in pockets; I would say Bangalore-based – South-based real estate stories will continue for a while longer, but surely not National Capital Region (NCR) and Mumbai-based ones.