May 06, 2013 08:42 AM IST | Source: CNBC-TV18

Mkt to focus on PSB results; buy Infy, SpiceJet: Tulsian

In an interview to CNBC-TV18, SP Tulsian of shared outlook on the market for next week and recommendations on various stocks.

In an interview to CNBC-TV18, SP Tulsian of shared outlook on the market for next week and recommendations on various stocks.

Also read: Market fickle but rupee worries behind us says Sandeep Bhatia

Below is a verbatim transcript of the interview:

Q: Now a big event is out of the way. In the next week what do you think the market will focus on?

A: Largely the focus will be on the public sector undertaking (PSU) banking results. You have so many PSU banking results lined up. Last week we have not seen good results coming in from many of the banks like Oriental Bank of Commerce (OBC) or Canara Bank. They have disappointed the market.

So probably the focus will remain on the banking results that how things are panning out on the asset quality and that will give the direction.

My stance on the Bank Nifty and the banking stocks has been cautious for this whole series. If you have a couple of bad results coming in from them again the party may get spoiled. You have two Supreme Court (SC) cases lined up on Tuesday and Thursday. One is of the Indraprastha Gas Ltd (IGL)-Petroleum & Natural Gas Regulatory Board (PNGRB) matter and second is of the intra-circle roaming case. So that will also be quite crucial for oil and gas and the telecom sector.

So you have to keep the watch on the events, which are likely to pan out coupled with the results especially form the PSU banking sectors.

Q: Do you have any buys or sells as we head into next week?

A: I have chosen two buys and two sells. First is a buy call on Infosys because all the IT stocks seemed to come back into focus. If you see the three biggies that is Tata Consultancy Services (TCS), HCL Technologies and Infosys, probably Infosys holds the good potential to move up and can move to a level of Rs 2,400 or so.

The second stock that still has good upside potential in spite of having seen a good run up in this last one week is the SpiceJet. The stake sell news may surface and apart from that company is gearing up to import the aviation turbine fuel (ATF). That will be seen quite positive and good cost reduction can be seen by the company on that account. The buying can make the stock to move to a level of Rs 45 in next one week to 10 days.

I have gone short on Tata Steel. The metal index has moved up because of the European Central Bank (ECB) rate cut of 25 bps and that has seen all the ferrous metal stocks having moved up. Tata Steel can correct to a level of about Rs 300 in next week to 10 days. So those who want to have a positional short can go short on that.

Second short call is Hindustan Petroleum Corporation Ltd (HPCL). I do not think that you have any story or any news lined up in this oil marketing companies (OMCs) space. The reduction in the crude prices may not extend further and that can make these traders lose their patience and we can see the stock correcting. A level of about Rs 292 can be expected for the stock in next one week or so.

Q: How would you approach the Indraprastha Gas stock? The issue has been getting deferred. The SC hearing has been getting deferred for many weeks now. Next week perhaps it will be taken up, but in the interim period is there any trading strategy that you would advise on IGL?

A: I think a good trading strategy exists. Suppose the hearing will start on Tuesday, I do not know whether the judgement will be pronounced on that or not. In the interim, one can look to buy the stock for a gain of about maybe Rs 7-8. We keep seeing lot of volatility or lot of two-way movement happening in the stock. I do not think that below Rs 300 it will breach.

However, if you take a longer call on the outcome of the case, I see strong case in favour of IGL. The Delhi High Court judgement stands in favour of IGL against which the PNGRB has preferred an appeal. I do not think that the SC will be taking the adverse view where the PNGRB is going to get any relief against the Delhi High Court order.

I am keeping a positive stance. My price target on IGL is at about Rs 360, which we may get to see in the next couple of weeks after pronouncement of the judgement.

In the interim, look for a gain of about Rs 7-8 on a trading cycle. Probably you can catch two cycles in a day for the first couple of days and thereafter wait to see the judgement.

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