Ambareesh Baliga of Karvy Stock Broking says that the momentum is taking the market up.
He says that there are a lot of positive flows, and HNIs and retail investors coming back into the market, is taking the market up. However, he adds that if the market has to sustain and go up further, more participation has to come in.
Excerpts from CNBC-TV18's exclusive interview with Ambareesh Baliga:
What is your take? Do you see the market correcting from here or are we still going up and this is just a pause?
We been cautious on the market for quite a while so at this juncture surely we will not turn bullish. But in case the market consolidates at this levels, atleast for the next two-three weeks, I think we may have to change our view.
But as of now we hold a view that there should be a decent correction from the current levels, possibly the Sensex could touch 12,000-12,100. But then there should be a decent correction from here but if that doesn't happen over the next two-three weeks; we will be forced to change our view.
What is it running on at this point you reckon? What's moving it up?
I think basically the momentum has started in the last three-four weeks, that is taking it up; flows haven't been too great but you still have positive flows and there has been some amount of participation from the retail and HNI segment, especially in the last two weeks.
I think that is what is taking it up. But then again, the participation is still not enough for one to sustain the markets at higher levels. Surely the markets can move up, possibly 100-200 points more. But we require much wider participation for the markets to sustain and keep moving up.
A quick word on United Western Bank. What you have been telling people at Karvy to do?
We have been asking people to atleast get out of their positions, if they do have positions. But surely it is not a buy, because even as of now it seems to be a big gamble. It is not very clear whether the shareholders of United Western Bank would get some swap in case it is merged with any of these other suitors.
There are enough suitors for this bank, but we really don't know whether shareholders will be rewarded at all or not. But at the same time, if one does have positions, one can gamble with just 50% of the holdings they have.
Are any of the infra stocks like JP Associates, IVRCL, Era Construction, Gammon India in your list that you keep talking about?
Not too many of these stocks. Among infrastructure stocks, we have Unity Infraprojects, which we have been recommending for quite a while, and we still feel it is under valued, even at the current juncture. We are looking at a price of close to around Rs 575-Rs 600, still lower then the IPO price.
What is the call on TVS now?
I think TVS Motors is a bit overvalued, although the figures for August were excellent, we still have concerns on the margins. So unless we see the September quarter results and see the margins improving, I don't think our call on TVS will change. So it's a decent sell at this point of time.
How do you play the frontline tech now because the run up has been strong but reports indicate that second quarter might see another earnings upgrade for many of them?
We have been bullish on the IT segment overall for quite a while and we have seen a very good run in the past couple of weeks. But then at this point of time, it is taking some rest.
Possibly from a long-term angle, one can still buy. But in the short run, since we are expecting a dip, these IT stocks could come down 4-5 per cent from here. At that point of time it can be bought surely. YoY one should be seeing atleast 25-30 per cent growth.
The other space, which livened up yesterday was auto ancillaries. Do you like anything is that space?
A: We have been a bit skeptical for a while because of the margins pressures, which we have seen in the past 1-1.5 years. But we have just one buy call- Pricol Instruments. That is quoting at around Rs 37-Rs 38 levels. Again, we do not see much of an upside, possibly a level of Rs 47-Rs 48, which I think is a decent upside for a stock like that.
How much cash are you asking your clients to be in right now?
As of now we are asking people to be atleast around 40% in cash. We had come down close to around 30% in cash, but then we have been selling for the past couple of days, so the cash component is increasing.
I think we will wait for atleast 2-3 weeks before deciding whether we should be deploying those funds again or not. Like I said, if the market sustains at these levels we will have to change our view.
Disclosures:
Disclosures are there, especially Unity and Pricol, my clients are holding some of the tech stocks we spoke about.
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