New Delhi: Ambareesh Baliga of Karvy Stock Broking says all the shocks are over and that there will be no sharp correction now.
He hopes that from Friday onwards, the rampant volatility in the markets will finally reduce.
"If I am a trader, then I will utilise this opportunity, when the markets are moving up towards the close of a settlement and exit and possibly, just wait out. This is not the time to trade," he said.
Excerpts from CNBC-TV18's exclusive interview with Ambareesh Baliga:
Q: What will happen when the markets open on Friday?
A: Hopefully from Friday onwards the volatility will reduce. But the upside is limited and it will move in a range for the next couple of weeks, if not for months.
Q: How is the trading sentiment at this point?
A: Very low. Most of the brokers must be sitting idle right now
Q: Are you not seeing any buying interest even in the front-liners?
A: Basically, I am not seeing any buying interest from the person on the street, but there seems to be a decent amount of buying interest from the local chip funds. Some corporate sitting on cash are showing some interest, along with some HNIs. But the interest is very low.
Q: The volumes are very low. Is it because people have got a big whack or is it because the volatility is unnerving them and they don’t know which way to trade?
A: Volumes come from the traders and most of the traders have been chopped off. Since traders are not there, delivery-based volumes are happening. That is the reason volumes are quite low.
Q: What is your sense of rollover to June? Do you think we will start June very light compared to previous months?
A: Yes, since most of the weaker players are out of the market, we will start light on June and depending on how the market moves, that is if it consolidates in June, then one can see positions building up again.
Q: Are you expecting to see sideways movement due to lack of participation or do you think this might get another sharp knock?
A: All the shocks are over and I don’t think there will be any sharp correction. But it will drift.
Q: What are you picking up from the grapevine about trade from the institutional quarters today?
A: There is a little amount of buying coming in from the local mutual funds. I think they are buying some of the front-liners. There seems to be some buying in ONGC, Tata Chemicals and MTNL, but at higher levels, hedge funds are still sellers.
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Q: Any thoughts on the entire metal space? Have you started buying anything there?
A: Not yet. One will see lower levels as far as metals are concerned. In fact, we would prefer to buy Sail closer to around Rs 65-66. We are looking at Tisco, possibly another 5-8% lower than the current levels to start buying. We just started buying in aluminum stocks like Hindalco Industries, but only a small quantity at this juncture.
Q: What about MTNL, there is some buying there? What are you telling your clients on MTNL?
A: We have been recommending MTNL to out clients since it has fallen below its Rs 160 levels. In fact, we bought it around Rs 145-148 levels. We are quite positive on this stock at this juncture and it should climb back to Rs 200-220 levels in the next couple of months.
Q: What is your sense on domestic funds? Are they picking up more of the frontliners or do you think there is more value to be found in the midcaps and hence more buying there?
A: The local funds are picking up more of the frontliners. But there is selective buying in the midcaps and there is decent value in a couple of these mid-caps.
Q: One word on cement, which took quite a whack in this past five-six days. Is there any aspect that you like in the cement segment?
A: In cement segment we like Gujarat Ambuja Cement, but not at these levels. I would get Ambuja possibly around Rs 10 lower over the next one-two months. So one should wait for lower levels to buy cement.
Q: What is happening in the auto space? Have you figured out why some of these stocks like Mahindra & Mahindra, Tata Motors, Maruti Udyog are getting bashed up such a lot?
A: I do not have much idea of what is happening in Tata Motors or Maruti Udyog. But I believe Ashok Leyland got bashed basically because the FIIs had bought much more and they were forced to liquidate. If I am not wrong, the holding of FIIs had gone upto 22% and from there, it’s come down to 16% as of now. I think that is one of the reasons why one saw it coming down from Rs 50 to Rs 38-39.
Q: Do you think this market could move up a bit or not quite?
A: If you are talking of local traders, I think they are out and I do not think they will come back soon. But if you are talking of hedge funds, possibly if the markets stabilise, their interest could come back. But the main question is whether it will stabilise and how long it will take to stabilise.
Q: What is the best way to read the last trading hours?
A: One should ignore what’s happening in the last forty minutes because there is more of short covering. Although there has been buying by local funds, it is more of short covering, which is pushing up the market like this. We will have to see what happens Friday morning because that will show you the right picture.
Q: If you were a trader, would you cut and take some cash home or do you think after today’s closing, you could actually open up tomorrow on a new series and that would be a better chance to exit?
A: If I am a trader, then I will utilise this opportunity when the markets are moving up towards the close of a settlement and exit and possibly, just wait out. This is not the time to trade.
Q: We spoke on stocks like MTNL, Tisco, Ashok Leyland. Would you brief us on any position in any of those?
A: I don’t hold positions in those stocks. But we have been buying over the last two-three days, but none of these stocks.
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