On Friday, the Sensex closed 24.21 points down at 19639.34 and the Nifty down17.35 points at 5951.30. Heavy selling by institutions left the Nifty with a cut of 1 percent and Sensex 0.5 percent this week. CNX IT and BSE Auto were the index gainers rising 7.9 percent and 0.5 percent respectively.
In an interview to CNBC-TV18, SP Tulsian of sptulsian.com says that he is optimistic on the market till mid-January due to heavyweight results like Tata Consultancy Services (TCS), Axis Bank, Wipro, Reliance Industries, HDFC Bank all lined up for the next couple of days.
Further Tulsian is bullish on IT sector after better-than-expected results of IT giant Infosys yesterday. He sees an upside on in Hexaware and Polaris in the IT sector. Tulsian also recommends buying Titan Industries and Apollo Hospital.
Below is an edited transcript of SP Tulsian’s interview on CNBC-TV18
Q: When we started off the year, the mood was extremely optimistic, what are you expecting to see for the rest of this series and do you think a breakdown is on the anvil?
A: I will keep my hopes alive for the next week. When the series started, I took a call to keep my positive stance till mid-January. That period is expiring with the week on January 18. Till then I will keep my hopes alive largely on the heavyweights results lined up for TCS, Axis Bank, Wipro, Reliance Industries, HDFC Bank as well as the two-wheeler giants such as Bajaj Auto and Hero Motocorp. We will be expecting better numbers from all of them. I do not think that any one of them will disappoint.
If the positive results of Infosys can make the markets to move up on one day with so much negativity or maybe the pessimism seeing from all other quarters, definitely positive numbers from these companies will also help the markets to maintain the level or hold the positive stance. For the next week, I will be keeping an eye on two sectors i.e. IT and cement. The kind of pessimism or the corrections that we have seen in the cement sector, now that sector looks to be under-owned.
The shorts are quite heavily built in the cement stocks so maybe we will see the turnaround. In fact, last week we have seen the false optimism building up in case of oil and gas sector. Even on Thursday, in spite of the government having deferred the decision to hike the diesel price and we are seeing Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) moving up. For now, we will see a swift change happening and the position shifting in the cement and IT stocks for the next week with hopes of positive numbers from heavyweights already mentioned.
Q: Is there any stock within the IT space which is either a frontliner or a midcap that you advise a buy on?
A: I will remain away from the larger ones because we have already seen Wipro moving up last week by 6-7 percent. TCS has also come closer to a price to earnings (P/E) multiple of Rs 17-18 but yes, I see a few good ideas available in the midcap IT space. There are four-five stocks, but I have zeroed in Hexaware and Polaris. If you see the performance of both the companies, they have been quite robust.
Considering the results of Infosys and the expectations built on all the IT stocks, one should look at the midcap IT stocks for a relative performance. The gains are still seen much more on a relative performance basis. So Hexaware is likely to come out with good numbers in the first week of February and Polaris is also expected to post better numbers. So maybe an upside of about 6-8 percent can be expected on both the stocks next week.
Q: Petronet LNG comes out with its numbers on Sunday, is there anything spectacular that you are expecting this time around and how are you positioned on the stock?
A: I am expecting the numbers to be lower than what the company has posted for Q2 where the profit after tax (PAT) was Rs 315 crore. That was largely because of the forex gain of Rs 115 crore. So maybe Q3 will be seeing the bottomline of close to Rs 300 crore or so because it is very difficult to take a call regarding the adjustments on the forex exchange fluctuation account.
Q: Would you pick up anything in the midcap space now or are you still cautious because of the sale-off?
A: Maybe not strictly the midcap stocks, but there are two stocks which are relatively safe to trade in this volatile market. One is Titan Industries because the kind of buying pattern, which we have seen on Friday indicates that this counter is quite heavily oversold and maybe some short covering coupled with renewed buying can move the stock by 6-7 percent in next one week or so.
Second stock is Apollo Hospital, which seem to have been in the accumulation zone for last couple of weeks and has been hovering at around Rs 800. It is due to give a breakout which can make the stock move to about Rs 850 in next seven to ten days.