SP Tulsian of sptulsian.com gives his stock ideas for the coming week.
He has chosen two stocks to go short from the banking sector: OBC (Oriental Bank of Commerce) and IndusInd Bank. To him OBC seems to be a good shorting candidate at the current level for a gain of about 4-5 percent in next one week.
Going on to the aviation space he does not see much upside left with Jet Airways unless and until there is a clarity on the open offer getting triggered. So, he sees SpiceJet as the only stock available now in the aviation space. "I see strong upside in the stock, but that will only be available to the investors those who have patience and the time horizon of about two-three months," he said.
He strongly believes that going forward, housing finance companies are coming back on the focus. Thus, he is keeping his positive stance on LIC Housing Finance.
Below is the verbatim transcript of his interview to CNBC-TV18
Q: You just heard me rattling away all the events to watch out for in the coming week. In your mind which are the events that assume priority?
A: Two events come to my mind. 1) The Indraprastha Gas (IGL) hearing that will in fact decide the trend. Petroleum and Natural Gas Regulatory Board (PNGRB) has preferred an appeal against the Delhi High Court, if the appeal is not upheld by the Supreme Court because this is the final hearing on April 30. So, that will be seen quite positive for stocks like IGL, may be the stocks like Gujarat State Petronet Limited (GSPL).
2) The Reserve Bank of India (RBI) meet is on May 3. That will again be the crucial factor because 25 basis point cut in the repo and cash reserve Ratio (CRR) seems to have been factored in by the markets. So, markets will be looking for repo rate cut of 50 basis points. If that doesn’t come in probably we will be seeing big corrections coming into the banking stocks.
3) The telecom stocks because Supreme Court has adjourned the 2G summons case by seven weeks. They have asked the Central Bureau of Investigation (CBI) to file the reply within next four weeks. So, again that will be a big respite for stocks like Bharti Airtel, which has seen a positive up move momentum in this last week. It is likely to continue by about four to five further in the stock going forward.
Q: The deal was done with Jet-Etihad but SpiceJet rallied about 24 percent. Do you think for someone who has missed the bus on SpiceJet, it would be prudent to put in fresh money at these levels or has the opportunity gone?
A: I don’t think that opportunity has really gone. In fact, in my view, the stock has not really seen the kind of upmove which is expected from the stock. Market probably is waiting for the trigger. Take for instance, if the management of SpiceJet even gives a slight hint or maybe the media speculation starts coming in that the management is looking for negotiating with some foreign airlines which is bound to happen. Whether that happens in next one month or in next three months but that will be a big trigger.
That can make the stock to move by about 30-40 percent. In fact, we have seen that kind of upmove in the past also in the stock. So, one has to look to buy this stock. I don’t think that there is much upside now left with Jet Airways unless and until we have the clarity on the open offer getting triggered.
So, this is the only stock available now in the aviation space. In fact I see strong upside in the stock, but that will only be available to the investors those who have patience and the time horizon of about two-three months.
Q: Last week we saw lot of positive result reactions coming in, whether it was LIC Housing Finance, whether there was United Phosphorus, Mahindra and Mahindra Financial, Hindustan Zinc, a lot of them. From that lot would you pick out any stock to see incremental gains in?
A: I am impressed with the LIC Housing Finance results because they have broken the Rs 250 crore jinx, which they every quarter report as profit after tax (PAT). For Q4 they have shown that profit at Rs 310 crore. I think that going forward the things are going to be really very exciting and the housing finance companies as such are coming back on the focus. So, I am keeping my positive stance on LIC Housing Finance.
I am not keeping a positive stance on United Phosphorus. The stock has already run up to a great extent by 10-11 percent in the last couple of days. So, it will not be prudent to take a call on that stock. Similar is the case with Mahindra and Mahindra Financial also. Even that stock has run up a lot. So, LIC Housing Finance still has the potential of moving up by about 6-8 percent in the near term.
Q: You have also been echoing Sudarshan Sukhani’s view that perhaps now the time has come to sell some of these banking names. Would you advice any sell strategies in the banking space next week?
A: I have chosen two stocks to go short from the banking sector. One is the Oriental Bank of Commerce (OBC) amongst the public sector undertakings (PSU) banks. I don’t think that results will really be cheerful as the kind of run up which we have seen in the stock price in these last couple of weeks. In fact two stocks from the PSU banking space have really risen beyond the expectation or beyond the relative performance with other banks. First is Canara Bank and second is OBC.
So, in my view OBC seems to be a good shorting candidate at the current level for a gain of about 4-5 percent n next one week.
The second stock I have chosen from the short side is IndusInd Bank. The bank has posted good numbers, but that has stretched the valuations on a very expensive parameters with a price to book of 3.3 and price-earnings (PE) multiple of 21 times. That is comparable or way ahead with the ICICI Bank and to a great extent comparable with HDFC Bank, which I don’t think deserves that kind of valuation. So, may be that stock can also correct by about 4-5 percent in the next week to 10 days.