Mkt to be rangebound for next 3 weeks: Karvy

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

Q: We have got stuck in a bit of a range. Which way do you see it coming out up or down? 

A: We have been optimistic on the markets for a while. So from here, we do not see much of a downside. We are close to the lower band. Some time back we felt that possibly around 4,350-4,400 should be the lower end of the band but the way things are, it looks like 4,200 should be the lower end of the band.  

So I do not see much of a downside from here. Since there is no real theme in the market because of which there is no direction. One can say that the markets are more or less consolidating at this level - there is hardly any trader interest. This is the one of the reasons that we are seeing very low volumes in the market and we are only seeing rollovers. But then at this point of time, a lot of investors who have a long-term view are getting into the markets and buying into thematic stocks with the view of next one year or one and a half years.  

Q: Because August has been a very flat series, do you see September being another month of consolidation with these kinds of low volumes, rangebound trade or do you see a substantial directional move? 

A: Looking at the way, there is hardly any theme in the market at the moment. So I do not see the volumes improving drastically from here or a clear direction emerging. So we will possibly see first fortnight or first three weeks of September possibly rangebound; we will continue consolidating at these levels possibly plus-minus 100 points from here and post that, towards the end of September or early October, one can see a sort of a breakout.  

Q: How are you approaching technology right now, the rupee has had a big slip - is that a good place to be or you are not very enthused? 

A: We have been optimistic on IT for the last six-seven months and even at these levels, we are recently bullish on the IT stocks. Especially looking at the way the rupee is slipping, it has to be on the positive for the IT space and it is a best defensive bet at this point of time when the market is not moving anywhere. One needs to get invested in these stocks because most of these largecap funds-stocks like Infosys or Satyam or Tata Consultancy Services (TCS) should at least return 20-25% from these levels over the next six-nine months. 

Q: How would you approach or tell your investors to position themselves in two of those commodities - fertilizers and sugar now? 

A: We are more or less close to the top because the way the sugar prices have moved in the recent past, it is already there in the prices of sugar stocks. So the upside from here is quite limited. But again if one is looking at next possibly 15-18 months, then one should be buying sugar stocks at lower levels.  

For a stock like Balrampur Chini, possibly the downside from here is not more than around Rs 80-82. So if it comes closer to those levels, one should buy at those levels with a view that it could go to around Rs 130-140 over the next 15-18 months.  

But fertilizers are more of a cyclical sort of a place. So the best is already over for the time being but we will have to wait for the next cycle to begin, which possibly could be another six-nine months away. 

Q: Why have volumes dipped so alarmingly? Are people not confident about whether there is more downside in the market? What do you sense from your clients? Why have people stepped away from the market now? 

A: Since there is hardly any direction in the market, most of the traders who were looking at short-term movement, which is not there, most of these traders are out of the market. Whatever we are seeing right now - F&O is more of a rollover sort of volumes than fresh positions. So it’s only an investor who is there in the market right now, as compared to a trader. 

Disclosures: