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Nifty can cross 6,000: Ambareesh Baliga

Aastha Agnihotri/Mumbai 06 Dec 12 | 10:11 AM

Ambareesh Baliga, an independent market analyst spoke to Aastha Agnihotri on FIIs, Sensex stocks and market outlook.

Markets have been cautiously optimistic about the FDI issue in Parliament and US fiscal issues. What is your sense of the situation and what is your current market approach?

Government agreed to voting on FDI after doing their background check as in whether they have required candidates to support and same has been conveyed by Kamal Nath in past two days so in my sense government will sail through this tide and pass FDI. Nifty has the ability to go over 6,000 levels on domestic cues and I doubt it will wait for clarity on US fiscal talks as the major roadblock would be cleared. Also GDP data pointed towards growth picking up slowly in coming quarters an so did the PMI data. Therefore, once FDI is passed which is largely expected than we me see markets surging to new highs and lot of retail participation can be expected from there on.

Do you think its the right time for retail investors to buy equities?

Absolutely. See, retail investors enter when they see buoyancy in the markets and markets have the ability to remain buoyant after the FDI reform so once they get this signal, we will see more retail investors buying stocks. Even in past few days w can seen smart gains in mid-caps and small-caps which is a clear indication of the retail investor's interest in the Indian equity at the current valuations.

Liquidity has been supporting Indian markets and so far we have witnessed healthy overseas inflows. Do you expect this liquidity injection to continue even if government fails to get a clearance on FDI in the retail sector in Parliament today?

FIIs have been consistently buying Indian stocks and this liquidity drive will continue going ahead. But yeah, if FDI fails to see light of the day then we will see a knee-jerk reaction in the markets which will be expected. Nifty may drift down by 150-200 points but I don't think the key support of 5660 would be breached even then.

Are you seeing a lot of retail guys or even funds getting into the act now? What is your take on the retail sector as a whole?

Yes, we are seeing lot of action from the retail investors and they seems to be pretty active in the current market situation. Fence sitters have started getting in and have seen short covering I think 6000 mark which we were talking for Diwali should happen this week.
I think retail sector as a whole has run-up a lot so fundamentally I don't see any major moves but sentimental push once FDI is passed may bring in modest gains in the stocks.

There have been some big moves seen in PVR, Cinemax and Jet Airways. What do you have in the broader markets which you think look ripe for a substantial gain?

Jet Airways tanked on Tuesday as 24% stake sale will negate any chance of open offer and fundamentally. Also I don't see any major operational improvement. Jet Airway's margins are unlikely to see a major upside as they have already done cost-cutting and also crude prices are not supporting. So I think this stock has had its run. For PVR, most of the news have already been discounted so will not advise buying at the current levels. I have been recommending lifestyle sector. In that I had recommended Talwalkars in the past. Now I am recommending Mahindra Holidays, which is a lifestyle company. At Rs 320-324 levels even the valuations seem quite attractive.

What is your view of stocks such as GMR, Ultratech Cement and MphasiS ?

GMR Infra, after that negative news flow there has been some positives. Once we had the stay order because of which we could see some up move. But unless of course, the investment board is set up for infra specifically I don’t really see a major move in GMR or other infra stocks at least over the next few weeks. I'm not actively tracking MphasiS so will not be able to comment on it.

What are the key stock picks from Sensex-30 companies?

I have a buy on Reliance Industries as we expect it to do well once oil ministry approves company's investment plans for the controversial KG-D6 block. Also the stock is close to its 52-week low so its the right time to enter RIL.
Also I have a buy on Bharat Heavy Electricals and Larsen & Toubro. Tata Motors would be good too but I will wait till its quarterly numbers.

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