Market near top, book profits: Ambareesh Baliga

It has been a good run for the market, though lacking in volumes, says Ambareesh Baliga, managing partner-global wealth management at Edelweiss Financial Services.

Talking to CNBC-TV18, he says that the next big trigger will be the Reserve Bank (RBI) policy on May 3. A rate cut of 25 basis points has already been discounted, but even if the central bank surprises with a 50 bps rate cut, the market may touch 5986 and not move higher. He says the market is close to the top and suggests booking profits. Also read: Nifty ends above 5900; ITC hits life high, IT stocks up Here is the edited transcript of his interview with CNBC-TV18. Q: A word on Hindustan Unilever and your recommendation post the bit run it has seem post its numbers? A: In fact, the numbers were much better than what most of us expected, but then clearly the market would not really like this sort of volatility in earnings from the leaders. So possibly after this knee-jerk reaction which we have seen on Monday, HUL should settle closer to about Rs 475 over a period of time. Q: It is a good run for the market as well, but we could be wanting in terms of volumes. But in terms of an upside potential, what would you think will possibly drive it above 5900 on a sustainable basis. A: The market will witness some sort of movement based on results. Other than that, the next big trigger is the Reserve Bank (RBI) policy where already 25 basis points have been discounted. Even if there is an announcement of 50 basis points, it does not leave much headroom. The Nifty may touch maximum maybe 5986, and not really move much above that. So I think we are close to the top this run and I would suggest some profit booking. Q: The RBI policy is on May 3. What is your expectation in terms of how the RBI could possibly move? If in case there is a positive movement coming in from the RBI in terms of a repo rate cut by 25 basis points, how much do you think the markets could move up? A: Like I said, 25 basis points have already been discounted and there is a clamour for 50 basis points - that’s what we have been hearing in the past two to three days. If it is 25 basis points, I don’t think the markets will really be enthused as such and I think we could be around the same levels. Possibly we could correct a bit more from here. In case it is 50 basis points cut, we could see a move closer to about 5950-5980 levels. Q: Do you have a view on LIC Housing Finance? That stock is actually defied gravity in the last two days post its numbers and generally is not that great in terms of fundamentals except for this quarter? A: No. Especially with budget housing really taking off to a certain extent, LIC Housing would be one of the major beneficiaries of this. Clearly, I would be quite positive on that stock going ahead.
 
Q: What is your opinion on both these banks reporting their numbers – Bank of Maharashtra is pretty much a smaller bank and Indian Overseas Bank (IOB) with possible net losses. How would they possibly come out this quarter? A: The numbers of Bank of Maharashtra are quite good and especially with the asset quality improving, there could be some interest from investors in this stock. But IOB even in the last couple of quarters assets has been an issue and it has really shown up this time. This is a clear avoid. Q: For the rest of the series, what would the markers be? Do you think 5900 could hold and maybe scale up further, or do you believe that despite good macros, despite the 25 basis points rate cut that’s expected, this market will just sort of drift in this range? A: I think most of the good news is already factored in. We have seen an extremely good run in the last 15-20 days. So unless of course you have a major surprise from RBI, I don’t see the market really going more towards 5980-6000 levels. Even after that, I don’t see too many positive triggers for the markets to continue moving up. Because of the sort of run which you have seen in the recent past, I think it is right for the markets to have a small correction. I am not saying that the markets could crack in a major way but then yes, it is time for a correction. That could be about 100-150 points from here.