Ambareesh Baliga of Karvy stock broking says that there could be an upside in the markets and one could expect an upside of around 300-400 points. He says that it is quiet difficult to call the markets at this point of time and it is time investors stop looking at the Sensex and look at material stocks.

He adds that this is a time to invest and not to trade and see where the markets are going. He further adds that those investors, who are stuck at this point, are selling when they see a recovery in the markets and investors who are sitting with cash feel that the markets will come down further to 8,500-8,000 levels and hence, they are not buying now.

Hence he feels that there is a lack of buyers and sellers in the markets at this point of time. He says that there are some FIIs buying and some other big investors are selling, but it will take time for the retail investors to come back to the markets.

Excerpts from CNBC-TV18's exclusive interview with Ambareesh Baliga of Karvy Stock Broking:

What is your sense, two days of a manic pullback, do you think it will continue?

I doubt. There could be upsides of another 300-400 points and it is quite difficult to call the market, whether it will go up today or tomorrow or whether it will go down another 500 points today or tomorrow.

I think it is time people should stop looking at the Sensex and start looking at individual stocks because quite a few stocks are available, like HDFC [Get Quote] or Tisco [Get Quote].

People should start looking at individual stocks and if they like the story, if they have a long-term investment plan then this is the time to invest. It is better not to see where the market is going on a daily basis because this is surely not a time to trade; it is a time to invest.

What is concerning you most about the market, are your clients sitting and selling, the moment they see a recovery in their stocks?

Especially people who are stuck will be selling whenever they see a recovery but whatever happens on the way up, people still wait for higher levels to sell and exactly the same thing is happening on the way down.

People who are sitting on cash are saying that it will come down more, markets will come down to 8,000-8,500 levels, so they are actually not investing at this point of time.

Basically it is a lack of buyers and sellers. There are the large institutions buying and there are some big guys selling at higher levels and it just comes down. This volatility will continue for a while. It will take a while for the individual investor, the smaller, retail investors to come back to the market. Going ahead in the next 4-6 months, one may see volumes quite low.

Has interest come back in the midcap side of the market, or not quite just yet?

Not really because if you look at the volumes which is happening on the midcaps, it is still not come back. Midcaps interest will come back much later. It will first be the large caps, which will take a couple of months. Midcaps could take anywhere between 6-8 months to come back to its real value.

What do you think about the Sugar space and what have you started buying there?

On sugar we have been negative for a long time. For the last four-six months we are negative, we felt that the valuations were very high. After the fall, which we saw in the last one-month, quite a few of the sugar stocks have become attractive, especially the stocks like Bajaj Hindustan [Get Quote] and Balrampur Chini Mills [Get Quote] At these levels, it is surely a buy, but again one needs to have a longer-term view.

Would you buy Hindustan Lever [Get Quote] and ITC ?

Yes, surely. It is there in our portfolio, both of them.

Do you think that it is likely that the markets could slip a bit, maybe hold 9,500 kind of levels and try and make an attempt to come back above 10,000?

That is possible. I think 9,400-9,500 is a good support level and on the top, one could see 10,400-10,500 kinds of levels, there is a decent resistance at those levels. But at the same time, I really do not rule out that the markets can go beyond that. In case it goes beyond that in the next 10-15 days, possibly it could be a good opportunity for people who are stuck, to exit. Whatever said and done, I do not think the markets will run away.

Is there anything that you like from the relatively new listings at this point, because so many of them have got hammered?

We like quite a few of our managed issues. We are looking at Bartronics India [Get Quote], we are looking at Lokesh Machines [Get Quote], even Nitco, seems quite cheap at the current levels. Nitco is basically into trading as compared to manufacturing. These are the three stocks, which we like.

Tactically, for the next few months, are you largely overweight on the frontliners and taking not so much exposure with the midcaps?

That is true, but we are also taking exposure to midcaps. Midcaps will start moving up much later, so it is more of the large caps right now. We also have around ten-fifteen midcap stocks in our portfolio and at the same time our buy list is more than hundred.

What about Tata Tele at Rs 19.50?

This is one stock, which we possibly should like at Rs 26 but at Rs 18-19 levels, I would be a bit cautious. It has moved up from Rs 15.5 to Rs 16 levels, just because visually it was looking cheap. A report from a brokerage house has excited people and that is one of the reasons why people are buying it.

Have you been buying anything in realty?

No, in fact, realty is one of the plays where we have been asking people to exit. All through the last one month, at least at the beginning of the fall, the realty was outperforming. So we were suggesting people to exit realty and enter the other sectors, which have fallen, even at this stage, we are still saying that realty still has some more way to go down.

Disclosures:

All the stocks, which we have discussed, you can assume that my clients and myself are holding it and we have been buying for the last couple of days now.

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