SP Tulsian of sptulsian.com recommends investors to book their profits in Tata Coffee after the shares surged today. The stock hit Rs 1,557.70 on NSE. The stock has been on a run, up 33 percent, since it announced second quarter results on Oct 22.
Below is the edited transcript of Tulsian's interview with CNBC-TV18.
Q: With regards to the finance minister’s comments, what would your perspective be with regards to the winter session? What is the most important sort of legislation that we could possibly expect, considering that it might not be disrupted?
A: I don’t think one should take the FY14 budget too seriously. Obviously, that will be the wishful statement coming from the finance minister, because everything will depend on the outcome of the receipt and expenditure for FY13. Though the finance minster has been confident that he will be able to maintain the fiscal deficit at 5.3%, everyone doubts that. However, maybe the FY14 budget is a bit premature but coming on the legislative, this session will be full of legislative agenda.
The government has already been trying to seek cooperation from the BJP. If you see the statements that were released today, Kamal Nath will be meeting Sushma Swaraj, Arun Jaitley and maybe LK Advani. They are trying to reach a consensus because there are so many things lined up. I don’t think that they are really asking for the consensus on the FDI because all the opposition parties are bent on defeating the FDI release made by the government.
However, there are many issues involved in case of the insurance bill and pension. There too, if you see the BJP’s stand, I think they are not likely to agree on the consensus on increasing the FDI limit in insurance to 49% because Yashwant Sinha has time and again raised their concerns on that. So, again all efforts will be made by the government, but it will be difficult to guess at this stage how the things will really pan out. Honestly, I am not very hopeful on these four weeks because things will really get quite murky in this four week session. I don’t think that any fruitful outcomes will be seen from this session as well.
Q: What is the feeling that you are getting for the remaining part of the November series? Where do you think the floor of this market could look like as we head into the winter session of the parliament and we have troublesome global cues as well?
A: When this series started I’d taken a call that Bank Nifty can fall below 11,000, That was because since this series is of five weeks I was taking that to be back ended and infact that is what is coming now to be right. Infact, if you see the behaviour of all the PSU banks for first two weeks, somehow you have seen their prices being maintained. Punjab National Bank(PNB), Canara Bank, Oriental Bank of Commerce, Union Bank, Bank of Baroda, Bank of India, SBI, none of them were going up. Infact, whatever upsurge we have been seeing in the Bank Nifty which has touched as high as 11,700 or closer to that in this series, largely came in from the private sector bank.
However, even the private sector banking stocks, especially Axis Bank or HDFC, have been getting exhausted at upper level. Infact, I am seeing the weakness continuing in Bank Nifty and I am expecting it to fall below 11,000. I am revisiting my same target and I won’t be surprised to see the level of 10,700 also in this series.
Obviously, with the fall in the Bank Nifty, you are going to see the weakness coming into the rate sensitive’s also. I am keeping my negative stance on three sectors- metal, capital goods and real estate. When the whole market corrects largely, on the rate sensitive’s fronts you see the profit booking coming in, in the real estate also. I am not too worried for infra because there hasn’t been much upsurge in it. We have not seen much up move in the infra stocks happening in this series. So, there may not be much weakness or much damage coming in, but these three sectors remain quite vulnerable.
A: It is an excellent opportunity to make an entry irrespective of whether you talk of Ultratech Cement, ACC or Ambuja Cement. If you really want to take a call on some of the smaller names, it could be Mangalam Cement and Century textile or even Prism cement and Heidelberg cement. The bias always remains from trading angle, so I’ll keep my positive stance on ACC, Ambuja and Ultratech.
A: I have been advising L&T Finance profit booking since morning. I don’t think that the stock can really move beyond Rs 86-87. So, maybe the profit booking can make the stock to correct to about Rs 74-75.
Similar is the case with Tata Coffee. I don’t think that this kind of rise is really justified, because when I compare the up moves in the CCL products , which is also a comparable play in the coffee space, that stock has not really moved in the same proportion. So even Tata Coffee can be seen for profit booking. So, a profit booking call on both the stocks.