Inflation not to spook mkts too much: Karvy

Ambareesh Baliga of Karvy Stock Broking sees 100-200 points upmove from here. Even if inflation is slightly higher, he doesn't expect it to spook markets that much.

Excerpts from CNBC-TV18's exclusive interview with Ambareesh Baliga:

Q: Almost at the doors of 15,000, how much more do you think this upmove might take us to?

A: On the Nifty, I clearly see a 150-200 point move from here and I suppose should enter a phase of consolidation because cues are positive. We really don’t see any negative cues on the horizon. Even if inflation is slightly higher than market expectations, I don’t think will really spook the markets. So clearly we should be in a range of possibly 300-400 points from the Nifty with a positive bias.

Q: How have you been approaching this upmove though have you been recommending clients to start trimming positions, booking profits or are you holding out?

A: For the time being we are holding out because after a long time, we have seen a move like this and we expect consolidation ahead for the markets. So I don’t think people should be in a hurry to book out at this point of time because first of all not too many people have bought at those lower levels, even we were buying to the levels of around 4,400-4,450 on the way down but after that we have slowed down our purchases.

So I think across the markets, I don’t think too many people have positions at lower levels in a way that is positive for the markets because at this point of time you will not see too much of selling coming in from those quarters. So I suppose closer to around 4,600-4,650 one can look at booking some profits but to buy at lower levels.

Q:  You were saying that you still expect that this rally could have some more legs. Stock-wise, what would you bet on for a trading bet at this juncture?

A: I would say sector-wise I would be buying across at least for trading gains especially the strong bounce back in the capital goods space should continue for a while more. Even in the banking space since we have seen a decent move in the past two to three days, this move can continue possibly for another 8-10%. So these are the two sectors where one can take trading calls but again we are bullish across – like at least in the medium-term we are bullish across sectors, except realty.

Q: What’s happening with power? Are you buying anything there?

A: In power, we have taken trading positions in NTPC and Reliance Infrastructure. And I suppose will hold on to these at least for the next three to four days.

Q: When we came into earnings season, it didn’t seem like the markets would have its eye so carefully on what happens on this quarter's performance, the eye was on couple of quarters out. But do you think this whole earnings performance can help or turn trend or help the markets to move higher?

A: I think it could because when we entered into this quarter’s performance, I don’t think the expectations were too high. There were other negatives on the horizon, which the people were looking at, and not much of attention was being paid to the sort of results, which are coming out. So I suppose going ahead we would pay more attention to these results, which are coming out which are in most cases slightly better than what people were expecting.

So I suppose this should be a booster for the markets, that is one of the reasons we are saying that we don’t see much of a downside for the markets and the markets should consolidate at these levels because all negatives were factored into the prices, when the markets went into a panic fall in the last 20-15 days. So whether we talk of IIP numbers or whether we talk of inflation or whether we talk of a slowdown in the economy, everything is factored in the prices as of now. 

Q: How are you gauging sentiment right now? Are people seeing this pull back as a good opportunity to clean out some stock, or are people believing that the worst may be behind us?

A: Surely, people feel that the worst is behind us. I don’t think we will see those levels of around 3,800-3,850 very soon, so I suppose people are very clear that’s the bottom and the markets will not see those levels. So I think you have people coming in to buy because there are lot of people who are sitting on the sidelines, when the markets were down but sitting on cash.

But in case if the market continues moving up, we have a target of around 4,600-4,650. But in case of it moves beyond that like closer to 4,750-4,800 levels you will have people coming in to book profits because people were buying on the way down around 4,400-4,450. So at least that quantity will come in at around 4,750-4,800 to be sold.

Disclosure:

It is safe to assume that my clients & I may have an investment interest in the stocks/sectors discussed.