Metals to see uptick; right time to sell IT stocks: Baliga

Independent Analyst Ambareesh Baliga expects some nervousness to creep into the market when Rajya Sabha would vote on foreign direct investment (FDI) in retail.

"It will not be a cakewalk like we saw in Lok Sabha. There it could be a very narrow win, in case they have a win," he said in an interview to CNBC-TV18. He expects to see some upmove in the market today. Meanwhile, metal stocks, which performed well on Wednesday are likely to see an uptick going ahead. Baliga suggested buying Tata Steel and SAIL at current levels. However, he is bearish on the IT sector. "Outperformers like TCS and HCL Tech also could take a beating. I would still look at selling Infosys, Wipro, HCL Technologies. It is a right time to sell it off,” he added. Below is the edited transcript of Baliga’s interview with CNBC-TV18. Q: How nervous is the market likely to be around the Rajya Sabha vote on foreign direct investment (FDI)? A: It would be a bit nervous because it will not be a cakewalk like we saw in Lok Sabha. There it could be a very narrow win, in case they have a win. People will wait for the next two days, till Friday to see as to what happens. We should see some uptick today, but one needs to see whether it will sustain at those higher levels. Q: There was big move on Sesa Goa, Sterlite, Hindalco, would you look to buy any of them? A: I was bearish on the metal space for close to a year. I had said that Tata Steel could see levels of Rs 360. It saw that and from there we have seen a bounce back. Going ahead, for the next couple of months, I surely see an uptick in metals. I would look at buying Tata Steel at the current levels instead of Sesa Goa and possibly buy SAIL, which has been beaten down quite a lot. Q: Do you go into next month’s earning season bearish on IT space? A: I have been bearish on the IT space for the last two-three quarters and I continue to maintain that stand. Their order flows would be weak going ahead. Euro Zone still has an issue. So, the December quarter results will be bad or worse than September. Outperformers like TCS and HCL Tech also could take a beating. I am slightly negative at this point of time. I would still look at selling Infosys, Wipro, HCL Technologies, which has done decently well. It is a right time to sell it off. Q: What is going on with the UB Group stocks, up again, down again? Yesterday the UB stock was down 13 percent? A: Speculators are quite active and as far as United Spirits is concerned. It is fully priced at this juncture. I was expecting levels of Rs 2,000 post the deal and it has crossed that. So, I do not see much of an upside from here. Q: The action has been in midcap names. What kind of midcap names are you pushing to your clients now? A: We have been looking at the infrastructure space because the way I see, the market move over the next two-three months would be led by infrastructure and capital goods. In infrastructure, we are still recommending GMR inspite of the issues they have had. It’s already there in the price. We are recommending GVK and among largecaps one could look at L&T and BHEL. I still see a decent upside there. We see levels of about Rs 1,840-1,850 in L&T. BHEL should at least go to levels of about Rs 270-280. Q: What is your sense of how retail will approach December now given the kind of interest we have seen in midcaps. Has it perked up already or they are waiting for a bit? A: To a certain extent its perked up, but once we have the clearance going through in Rajya Sabha, most retail investors and high net worth individuals (HNI) will come back and that will be closer to 6,000 levels. They would be responsible for pushing market from 6,000 to 6,350 levels because most of them have been sitting on the sidelines for the last few months. Once they come in, one will see that major perk up.