See Nifty in 6080-6120 next week; buy J&K Bank: Baliga

Ambareesh Baliga, managing partner, Edelweiss Financial Services says that even though volatility is here to stay the market is likely to bounce back next week. He expects the Nifty to trade between 6,080-6,120 levels.

In terms of stock-specific strategy, he suggests buying Jammu and Kashmir (J&K) Bank based on its impressive fourth quarter performance. "We have a price target of about Rs 1,738; Rs 500 higher than where it is right now," he told CNBC-TV18.  Meanwhile, he recommends selling Tata Motors at the current market price on lack of meaningful upside. Also read: Nifty to slip sub 5970; don't catch falling knife: Sukhani Below is the edited transcript of his interview to CNBC-TV18 Q: This week our markets have closed 3.5 percent lower. Perhaps we saw that coming because of the huge move that we have seen on the upside. But do you expect the cut to get arrested at these levels or do you see more downside for the market? A: No, in fact we were looking for some correction but the brutality was quite a lot last week. I suppose the volatility is there to stay. Having said that, I do not expect the markets to break too much from these levels as we have extremely good support at 5,800. The markets will not break 5,900-5,920 levels. I would suggest that as traders, people could look at buying at the current levels because we should see a bounce back next week. It is very much possible that we could move more towards those levels of 6,080-6,120. Q: The three big earnings disappointments last week were State Bank of India (SBI), Larsen and Toubro (L&T) and Bharat Heavy Electricals Limited (BHEL). Among these stocks is there any stock you would buy on a dip? A: We felt that the disappointment was still an opportunity to buy because going ahead; we still see the order flows extremely good at about 20-22 percent looking at the growth of another 15-17 percent on the bottomline. On L&T, we have a price target of about Rs 1,840-1,850. So in fact one should utilise that fall to buy in. We feel that the asset quality on SBI should stabilise going ahead and the fall which we saw was an opportunity to buy. Here also, we have a price target of about Rs 2,650. Q: If you had to buy one stock in this market, which one would it be? A: In banking space, Jammu and Kashmir Bank has been showing extremely good results quarter-on-quarter (Q-o-Q). Even the last quarter we saw a 20 percent growth and close to about 23 percent growth in net interest income (NII). We expect approximately about 12 percent compounded annual growth rate (CAGR) over the next three years and with adjusted book value of just about one time, I suppose at these levels, it is extremely great buy. In fact, we have a price target of about Rs 1,738 which is about Rs 500 higher than where it is right now. Q: Tata Motors reports its numbers next week; what is the sense this time around because last quarter we saw this standalone business post a loss and no one was impressed with the earnings last quarter although Jaguar-LandRover (JLR) did bail them out. What is the prognosis for this quarter? A: This quarter I doubt whether JLR will be able to bail them out like they did last quarter because margins again would be under pressure and with a sort of a slowdown which we are seeing in China, the numbers for JLR going ahead also will be quite poor. So in fact, I do not see too much of an upside for Tata Motors. So this is a great price for people to possibly sell and exit.