Excerpts from CNBC-TV18's exclusive interview with Ambareesh Baliga:
Q: What are you hearing from the trading desk on what happened in the last one-hour?
A: People are actually holding on to their longs and hoping that there will be some amount of short covering. The markets would move more towards 4,950-5,000 levels and they would possibly be able to clear their positions at those levels. There is some amount of panic coming in from those quarters. There is some amount of selling coming in from those people who are actually long in the market.
Q: Do you think we are still in a bit of a trading range or is the market threatening to breakdown?
A: There will not be a breakdown, but we will continue to move down slowly. We should settle more towards those 4,500-4,600 levels. On the Sensex, it will be closer to around the 15,600-15,800 mark. That’s the level where there should be some amount of consolidation. The markets will not go to levels, which we had seen in the past 3-4 months on the lower side and will not break the levels we have seen earlier.
Q: Have things worsened over the last couple of weeks in terms of newsflows, and fundamentals?
A: Things have not worsened as such but the interest of participants have actually come down quite a lot. People are just totally disinterested in this market. In the last two-three weeks, investors and traders really haven’t made too much of money. Since the markets had capped off at those 17,400-17,700 levels, there has been a total disinterest in the market which is very clearly visible in the volumes. This is what we are afraid of. In the next two-three months if you have lesser amount of participation, that will have a cascading effect overall.
Q: What is your take on L&T and Suzlon?
A: We have liked L&T for a while, especially ever since it had that crack from Rs 3,600 levels to Rs 2,600 or Rs 2,700 levels. It is a buy at those levels and these results which have come today, especially the bonus, clearly proves that the next couple of quarters should be good for L&T, especially after the press conference which the management gave. Performance, which will come in the next couple of quarters and even at these levels, is seen to be good. It could be a hedge for the market and the downside is not seen beyond Rs 2,800 levels for the stock.
Since the last 2-3 quarters, we have been shunning Suzlon and suggesting people that at every rise one should be exiting. The results, which have been coming out, have been inconsistent. So, even at these levels one should be ignoring that stock.
Q: What about IFCI? There was a huge run-up in the price and absolutely mind boggling volumes.
A: Its more of a trading stock. Since the talk of a strategic investor, people are generally expecting that the levels would be higher than what it is currently quoting at. It would not be Rs 100 or Rs 110 levels. But surely in case the investor actually comes in, it should be closer to Rs 78 to Rs 85 levels. So, as a trading buy, one can look at buying this stock if it comes down to Rs 57 or Rs 58 levels and at around Rs 67 levels or Rs 69 levels. This stock is not moving much beyond Rs 70 to Rs 75 levels.
Q: What is the verdict on Tata Motors now, after the 8% fall today?
A: The worse seems to be over because if you see from the recent highs it has already fallen close to 12% to 15%. Again, today’s fall is based on the fact that there would be a dilution to the extent of 30% to 35%. Based on that, we have already seen another 15%. We could possibly see another 5% to 6% the day we have the petrol-hike. One can attempt to buy that stock at those levels because if you are looking at the next 12-15 months scenario, especially with the small car coming in, that is the time you should see the stock perking up and trying to attempt those levels at Rs 700 or Rs 725. So, closer to levels of around Rs 550 or Rs 555, one should be buying this stock.
Q: How are you feeling about how retail HNI’s approaching the market now?
A: They are staying out and are not investing anything fresh. At the same time, they are not booking losses. That is one of the reasons you are not really seeing redemptions in the mutual funds because most of them are sitting on losses, if they have invested in the last 6 months or so or in the last one year.
Since they are sitting on losses, they are not redeeming and that is in a way positive for the mutual fund managers. But the main thing is whether the interest will come back in the market which we don’t see it happening at least for the next couple of months. Unless you have a sustained move up which surely has to be started by the large investors of mutual funds or the FIIs, you really will not have retail investors coming back in the markets in a big way.
Q: How likely are the chances that we go back to test the lows that we had in March?
A: We really don’t expect the markets to touch the lows in March; the markets should consolidate closer to 15,600 to 15,800. Below that, it seems a bit difficult. We will reach those levels closer to the time when we have the petrol hike or 3-4 days post the petrol hike. We should consolidate at those levels.
Q: Are you getting a feeling that the market will continue to remain weighed down in known and unknown problems for the foreseeable future? Are you seeing the problems getting discounted?
A: The problems are not totally discounted. We clearly have the issue of oil price hike out here. That will be the final nail as far as the markets are concerned at least for the next couple of months. That is what will keep it down because clearly that will have an effect on inflation. So, we may not have a major crack as such but the markets will be subdued and may not really move up much more from here.
We are looking at the markets settling close to around 15,600 to 15,800. That is the level where it will lie lacklustre for a while. People will lose nterest and possibly sometime in the later part of June or in middle of July, the markets will slowly climb back. Around October or November, we should see closer to around 18,000 or 18,500 levels.