Should you buy Bharti, RIL, Tata Motors now? Baliga guides

Despite disappointing quarter one results, market analyst Ambareesh Baliga suggests that one should buy Bharti Airtel . The stock tanked almost 7% yesterday after it disappointed the street by reporting lower-than-expected numbers in the quarter ended June 2012.

"It is very much possible that we could get a better price." The stock closed at Rs 274 yesterday because of FII selling, but it could slip to about Rs 255-260 going ahead, he added.

Its consolidated net profit fell by 24.23% quarter-on-quarter to Rs 762.2 crore, while analysts on an average had expected it in the vicinity of Rs 1,075 crore.

However, net sales rose just 3.3% to Rs 19,350.1 crore from Rs 18,729.4 crore during the same period, which was almost in-line with forecast of Rs 19,530 crore.

However, Baliga expects rise in tarrifs to be one trigger for the stock.

Bharti's net loss from Africa widened to Rs 669.3 crore from a net loss of Rs 301.6 crore in the same period last fiscal.

It added 2.7 million users during the quarter taking its subscriber base to nearly 60 million at the end of June 30, 2012, across 17 African countries. Average revenue per user stood at USD 6.5 per month.

Its African operations have the great potential to perform well ahead and boost the company's performance, which the market is not taking in account, he added.

He also shared reading and outlook on  Tata Motors and Reliance

Below is the edited transcript of Baliga’s interview with CNBC-TV18

Q: Tata Motors is to announce its numbers today, what are you expecting this time?

A: Profits should move up about 24-25%. But in case again there is a disappointment like what we saw in Bharti yesterday, this stock can go back to Rs 220-222 levels from where it started its upmove this time.

Q: You spoke about the disappointment in Bharti, at Rs 274 would you buy the stock or do you expect to get a better price?

A: The way things are and the sort of a disappointment which we saw yesterday, it is very much possible that we could get a better price. Although day before yesterday even you had asked me I had said yes, we are buying at about Rs 290-294 levels. But the sort of a disappointment which was there will make these FIIs who have been quite patient with the stock for a while to possibly sell in.

Yesterday what we saw was FII selling because of which we saw this stock closing at about Rs 274. It is very much possible that we could see levels of about Rs 255-260. Maybe at those levels one should take a fresh view. My belief is that going ahead tariffs will move up. That will be one trigger.

The other one is clearly the African operations which I see how the Indian operations were in 2001 that is where the African operations are there right now. That is a huge potential, which I don’t think the market is taking to account. From that point of view, one should look at buying Bharti at lower levels.

Q: What do you think, Reliance is good for more than Rs 800 or you would draw the line here?

A: It is good for more than Rs 800 and the bottom has moved up. Earlier Rs 700-720 was a good bottom for Reliance, which has moved to levels of about Rs 750-760. I suppose the next big trigger for Reliance would be the gas pricing post 2014. That is something to be looking forward to.

I also feel that the petchem margins have bottomed out. In the next quarter you will see that petchem margins are moving up. Refining margins have already moved up, we have seen the Singapore refinery margins moving upto USD 7.75-8. With the premium, which Reliance gets, I suppose that the next quarter results would be much better than what we have seen last time.

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Liquidity may push Nifty higher to 5450-5500 says Baliga

In case we see those levels of 5450-5500 which I don't really rule out because of the liquidity, I'll be in cash to the extent of about 25-30%Ambareesh Baliga

Market Analyst

The market has kept the momentum going. It's been a solid run on Dalal Street today. What started out as a flat day, ended in strength. Large caps led the rally. The Nifty gained 54 points to fall just short of the 5,350 level. The S ensex too shut shop with a 188 point gain.

Experts feel that the market has shown strength and is likely to continue the run for sometime. Newly-appointed P Chidambaram’s assurance of getting Indian economy back on track and solving tax disputes seem to have worked well with investors.

"It has moved beyond based on the intent of what's been announced by Chidambaram and in case again you don't have the policy action following this, we are back to square one," warns Ambareesh Baliga, market analyst.

As an investment strategy, he suggests booking out to a certain extent. "In case we see those levels of 5450-5500 which I don't really rule out because of the liquidity, I'll be in cash to the extent of about 25-30%," he advises.

Below is the edited Transcript

Q: You were talking about this 5350 level on the index in the morning. We have come to that point. What does the next hurdle look like for the market?

Sukhani: Last week I said there is no direction so, buy puts and calls. Anyone who bought puts and calls is making money, in spite of the loss on puts. Yesterday morning before the market opened I said just buy, that was at 5250. So, the Nifty was almost 100 points up before the buy suggestion was given.

Sometimes the trend is very clear. At this point we are in a complete momentum market, fundamentals don't matter much in this type of market. The first resting point for the Nifty is 5350. However I don't think this is going to act as resistance. It means that we maybe seeing a market that surprises all of us on the upside. Every dip is a buying opportunity. So, we buy every breakout and not make the mistake of going short. We will see these 50-70 point intraday dips coming and that should be bought into.

Q: Would you buy any of the aviation stocks at these levels?

Baliga: I would not buy at these levels. The best quarter is the one which has passed by. The passenger load factor is elastic to the fares, which are already quite high and I don't think these companies can really cut costs any further. Going forward, margins would still be under pressure and what we are seeing now could be the high for the aviation sector. The only trigger could be FDI in aviation which might come in the next couple of months and could take the stocks up a bit further, but till then I think this is the top.

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