See Nifty heading to 5400; sell on rallies: Edelweiss

In an interview to CNBC-TV18, Ambareesh Baliga, managing partner-global wealth management, Edelweiss Financial Services shares his views and outlooks on specific stocks and sectors.

Below is the edited transcript of Baliga’s interview to CNBC-TV18. Q: Are you expecting a pullback as well or do you think we will go down to sub-5,500 levels very soon? A: World markets have bounced back and because of global rally we could see some bounce back. However, this would be a technical bounce back because as long as we do not have a handle on the rupee, I do not see people coming in to make fundamental buys at these levels because we do not know where the rupee could go because people are now talking of 63-64/USD levels. In case that happens we could see the market seeking lower levels. So, I still stick to whatever I have been saying in the past week or ten days that it is possible that we should seek lower levels, which is closer to 5,400-5,420 levels. Therefore, any bounce back should be utilised by people to book out to a certain extent and go short. Q: How do you see the gas stocks moving today ahead of Cabinet Committee on Economic Affairs (CCEA) meet on gas pricing? A: One could see some sort of a rally in the gas stocks and specially stock like Reliance Industries where increase in prices will surely be beneficial. However, people were earlier expecting price closer to USD 8.5 but that is not going to happen. Q: What do you do with stock like Tata Motors? It has lost more than 9 percent in the last seven days. Is that stock beginning to come off now? A: I think it is beginning to come off because we also see some amount of slowdown in China which was a marking market for Tata Motors. The domestic market hasn’t been doing too well for them and for the overall auto sector for quite a while and that is also expected to continue atleast for the next foreseeable four-five months. So, even at these levels Tata Motors seems slightly overvalued and one could see further correction. Q: How would you approach jewellery names which have collapsed completely over the last few days? A: I think even at these levels it doesn’t make sense to buy because there is great margin pressure and they have been enjoying better than the average market PE for quite a while. They have been the darlings of the market for the last couple of years and because of which once this adverse news came in about gold, we have seen that crack. There is further weakness expected in most of them so even at these levels it doesn’t make sense buying them.