Even as the near-term outlook for the market remains a bit hazy, the market is headed sharply higher in the medium term, says Jai Bala of cashthechaos.com.
In an interview with CNBC-TV18, Bala said the next leg-up in the market will be very strong. "The 6,900-7,900 bounceback was a trailer. The next move will put a lot of people in awe," he said.
Bala has previously said he expects the markets to take out previous all-time highs by May next year.
In the near term, the market could head higher if 7,990-8,010 is taken out, Bala said. "Then it will be clear the next leg is under way."
Below is the transcript of Jai Bala’s interview with Surabhi Upadhyay on CNBC-TV18.Q: The market once again getting a little nervous around 7,900 and we have been in this trading zone for a while now. Do you see a break on either side of the zone anytime soon?A: It is only the short-term that is getting very hazy, but from a timeframe beyond two weeks or four weeks probably, beyond that, it is going to get very clear. The next leg is going to be very strong. What we saw between February low of 6,825 to recent high of 7,500 and change, that is only a trailer. The next leg is going to be much more powerful in what we are going to see. It is going to keep a lot of people in awe and it is going to surprise on the upside a lot. But to be in that stage, we should let the market play out what it is doing in the short-term. The ideal situation would be to see the market go back closer to the 7,500 mark. That is the idea thing, but markets have this habit of surprising as many people as possible. So, be prepared for the slightly longer term and let the short-term play the way it is playing out.Q: So what sort of target are you working with since you are slightly optimistic on the long-term? Right now, where does the first resistance lie and then, if that resistance is taken out, then what kind of higher upside are you talking about?A: That is a very important question. 7,990-8,010 is absolutely critical for the bull-bear divide. Once the market is able to take out 7,990-8,010, it will be very clear that the next ferocious leg of the market is underway. So, I do not need to say that. The market will tell you on that time that it will be breezing past the time, you will probably see a 2 percent day or a 3 percent day. That will be a very clear indication that the market is doing what it is expected to do. So, that is the kind of positioning you should be anticipating, but until that is taken out, you should be prepared for an extreme short-term choppiness to play through.Q: What is the Bank Nifty telling you at this point around 16,600 odd?A: The Bank Nifty is going to be the leader in the short-term, but once the Nifty is above 8,100, it is going to be the other sectors like fast-moving consumer goods (FMCG), oil and gas that is going to take the lead. But it is not that the banking sector is going to be a laggard, but it has done its job of pulling the markets out of the dumps in the first leg. The next leg is going to be a different set of leaders. So, the fact that it has taken the market’s fancy in the first leg, it is seeing some short-term correction. But stocks like Karur Vysya Bank, stocks like Axis Bank in the front line names, they are going to do extremely well in the medium-term.Q: But what about an ICICI Bank? That is the biggest problem for the market today, for instance, but even otherwise, it has been trending down for a while now. Do you see a recovery any time soon?A: On the first leg, ICICI Bank led the way up, so basically, what is happening at this point in time is a big correction to the big move. So basically, it is nothing to be worried about. You are going to see the stock probably pull back somewhere closer to Rs 219 or it is going to be a slightly deeper correction, you might see something like Rs 210. I do not see the stock dropping beyond that, but nevertheless, the stocks to watch for is going to be something else other than ICICI. ICICI has done its outperformance in the first leg. The next leg is going to be something like an Axis.Q: What else is looking ripe for participating in that big upmove?A: We can talk about something in the midcap space. When I was on the show in Fear Factor on January, I spoke about a couple of stocks, something like Phillips Carbon Black and Monsanto India. Monsanto is obviously in the news from yesterday. Last time when I spoke it was something about Rs 1,800-1900. The medium to long-term projection for this stock is something like Rs 4,000. So, it is still early days for the stock. And we spoke about Phillips Carbon Black somewhere when it was in the early 100s and closer to 90s. So, this stock has actually given a decent performance in the short-term and this is just warming up, so we can look at these stocks. And I said FMCG is going to take meat at that time and Britannia was my top-pick and it is doing pretty well at this point of time. Even today, it is holding up very well and not outperforming the market and Britannia is another stock to look out for.
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