Ambareesh Baliga of Karvy Stock Broking sees resistance at 16,500 to 17,000 for Sensex. He also adds that the downside is quite limited as far as technology is concerned, whereas for the frontline stocks like Infosys, TCS, Satyam, Wipro, the upside is around 30-35% from here.
Excerpts from the exclusive interview with Ambareesh Baliga:
Q: Do you think the bulls are getting tired or you think in the near term we will scale 5,000 Nifty and stay above that?
A: At this point in time, the bulls are getting a bit tired, because we have seen 3 good days, so possibly at these levels, there is some amount of profit booking happening but no doubt over the next couple of weeks, we will see higher levels, but surely 16,500 to 17,000, you will have some amount of resistance.
Q: For somebody who was lucky enough to get long around 4,600-4,700, would you advice him to take profits now or hold on for more gains in the near term?
A: I would suggest that one should book some profits at this point in time, because especially if he is making 10%-15% in a particular stock, it is prudent to book some profits because this is surely not a fresh bull run start, we are infact in a consolidation range, so I don’t see the markets going too much more so again so when you have a crack or a correction, possibly to those 15,500 levels, you should again buy.
Q: Has the mood turned or changed on technology though?
A: I suppose so, infact we have been taking a contrarian call for the last 3-4 months seeing that things are not that bad in technology, and we are glad that we have been proved right especially after the Infosys results. So I suppose from here, the downside is quite limited as far as technology is concerned, whereas we feel that most of the frontline stocks like Infosys, TCS, Satyam, Wipro, the upside is around 30-35% from here. On a stock like Infosys we still have a target of around Rs 2,000-2,050.
Q: What did you make of the trading interest that is back in the market, Arvind Mills is up 9%, and fertilizer stocks are buzzing, Hotel Leela, Neville Lignite, we haven’t seen this kind of a gainers list in a long time?
A: That’s a basic instinct of any trader, and especially when the markets were going down every other day, most of these people are staying out but once they saw the markets consolidating and moving up, quite a few of them who had some cash left, are again back in the freight.
Q: What’s going on with Orchid, you think as a huge discount on the futures, cash market stock is running away at Rs 325, what are you picking up form the street?
A: I think it is madness in Orchid Chemicals at this point of time because I really don’t see the open offer level which is higher than these levels. I think it will be closer to around Rs 275-280 levels that’s the best possible level.
Q: What’s going on in the midcap IT space, and what would you buy here because a whole clutch of them have gone up 10%-15%, in a last couple of days?
A : At this point of time, possibly I may not buy in the midcap IT space, I surely buy on dips but whatever we have bought in the recent past, we have bought stocks like 3I Info-tech, Subex, Aztec. Aztec showed a decent movement today, and we booked some profits because this stock was quoting at around Rs 56 to Rs 60 levels just about a week or 10 days back, today when you are getting Rs 77 to Rs 78 levels, then you really make some sense in booking some profits and that’s exactly what we are doing today.
Q: Just a quick word on how this might go down with the trader community, Orchid is losing a little bit of strength now?
A: I don’t think it will go down well with the trader community, because any price above Rs 215 or Rs 220 or Rs 230, is fundamentally quite expensive for the market and it had moved up basically because of the expectations of an open offer which again couldn’t have been beyond that Rs 230 to Rs 270 range, so there was no reason for this stock to quote at the current levels, in fact the market was expecting that the original promoter will come back and buy at these levels fromRanbaxy. That was the feeling which was there in the market so that’s the reason why it has taken up so much, but I feel it will settle more towards that Rs 220 to Rs 230 levels.
Q: Is the worst over for the brokerage space you think, we have seen Geojit move up after the earnings, Motilal Oswal is moving ahead of the earnings, what do you think?
A: Not really, I think this is only a bounce back, which we are seeing that most of the brokerage houses are still going through that pain, because the volumes are still low which means that the brokerage levels are quite low and at the same time your expenses are mounting. So I don’t see the picture to be too rosy for the brokerage houses at least for the next 2-3 quarters, so I think people should book profits in this uptrend.
Q: What’s your favorite space in the midcap lot now, since some interest is visible, what are you recommending your clients to go out and buy?
A: Among the midcaps, we are buying across various sectors like IT, but we have stopped buying IT right now but we also buy into paper, in fact TNPL has been one of our favorite bets in the recent past, we have been buying like the auto space, we have bought Precol, we have been buying Lucas for a while, so it is across various sectors but at the same time we are avoiding sectors like Realty and Power.
Q: In the near-term how much upside do you see for the market, if the market were really to move up a little bit more, what’s the top end for you?
A: Like I said, 16,500-17,000 levels, is a level I think where you will see lot of resistance. Going beyond that at least for the next month and a half, two months seems a bit difficult. And on the lower side, I do see a lot of support happening at closer to around 15,300 to 15,500 levels. So our strategy has been quite clear and on days like these, we have been booking profits.
Q: Anything you have picked up on Aptech, the stock was up 16% by the time we closed up?
A: I am not tracking this stock so it’s a bit difficult for me to comment on Aptech.
Q: How are you looking at the last minute cooling off of gains of the markets in general, would you say that as we head into a long weekend, you could see more of correction tomorrow, or do you think this rally still has some headroom?
A: We could see some correction, assuming that the international markets don’t really fair well this evening and tomorrow morning, the Asian Markets, surely I think we will see a weaker day tomorrow, but at the same time, we should remember that it’s a shorter week, we have holidays ahead, and again the inflation figure is something which people will watch out for, because people are expecting the numbers to be lower this time especially with the action taken by the government, so people will look for the inflation number, so because of which, the markets would be a bit subdued and the last 3 sessions have been good so its quite natural that people would be booking profits
Source: Moneycontrol.com
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