Sep 24, 2011, 01.55 PM IST | Source: CNBC-TV18

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In an interview with CNBC-TV18, SP Tulsian of sptulsian.com gives investors his cues on how he reads specific stocks and sectors during these turbulent times in the market.

In an interview with CNBC-TV18, SP Tulsian of sptulsian.com gives investors his cues on how he reads specific stocks and sectors during these turbulent times in the market.

Below is a verbatim transcript of his interview. Watch the accompanying video for more.

On fertilizers:

Urea decontrol is not an easy job for it to happen. The market has taken urea decontrol in a very liberal sense. It should rather be seen as a urea price deregulation not the industry deregulation and that is not possible unless and until you take a larger view. There are so many issues involved like feed stock migration, gas allocation, the expansion policy, the capital subsidy policy, so I don't think this was really possible. The worst part is that the impressions have all been given by the Committee of Secretaries, by the Group of Ministers meetings.

The recommendations have all gone to Committee of Secretaries, earlier it was placed before the Group of Ministers. The market has always been dancing to the hopes of the outcome of these meetings, which I have never relied upon. You cannot compare urea decontrol and the complex fertilizer decontrol on the same level. Yes, we are seeing the correction because of that and if you see the share price I don't think there is much potential.

Take the case of Chambal Fertilizers . I have been holding a view that this looks quite overvalued but there is a lot of trading interest where the stock holding is at Rs 110 level. If you see its last one week's price behavior, that stock has not really corrected except today touching close to about Rs 100. I will not be surprised to see it moving back to Rs 105 or Rs 106.

So you may have a few trading interest in stocks like these but if you see a pure fundamental call there are many urea makers like Tata Chemicals, GSFC, RCF but all of them have not been moving in sync with the price which we have been seeing in Chambal Fertilizers.

This is not likely to happen on a pure fundamental basis, one has to really hunt for ideas purely on the fundamentals and valuations and wherever you find an interesting story, one should really indulge or play into that as an investor or be confined to Chambal Fertilizer purely as a trading play but I don't see any decontrol happening in the next 12 months or so.

On various stocks:

It reminds you of 2008 when you have seen the same kind of things happen. One has to really look at the repayment, when it all gets matured because the next six months is where it will be a problematic area for all these companies and one has to really be choosy while taking even a trading call because whenever these kinds of companies are located or identified, you see a sharp fall. Yesterday, we saw that in the case of Orchid Chemicals, so one has to be really careful. It is definitely a fundamental concerning issue for all these companies.

On infrastructure:

Individual stocks are victims of their own problems. If you see Punj Lloyd , I don't think that at any point of time there was respite from the liquidity point of view or from the profitability point of view, because they have been struggling with their overseas orders. We have seen some relief in one of the quarterly results which really cannot get extrapolated. If you take a buy and large call then their second problem came from the Andhra issue where four-five infrastructure companies were involved because of the political favor which was obtained by those companies.

Then you see the large asset based companies like GVK, GMR Infra which have been struggling with the huge debt in their books. These are the main concerns for all these companies. Whenever we have seen any rally that has been very short-lived, I do not think one has really made profit from those rallies even from a trading and investment point of view. That is really keeping the traders and investors both away from these stocks.

On Tree House :

After all the recent IPOs, I am honestly not convinced with this kind of activity. I wont call it a speculative or operator play but definitely the valuations do not justify. If you compare it with Career Point, we saw this kind of trading interest built when Career Point got listed. It has corrected by more than 50% after couple of months.

I wont be comfortable taking a call on this stock because you never know when the profit booking or maybe an exit by informed circle starts. Even traders get stuck in these stocks. It definitely looks quite over valued and I am not convinced about the level of activity, the profitability etc.

On ADAG Group:

I don't think that all these rallies are really sustainable. At this moment, if I had to pick two stocks from the ADAG pack, I would pick Reliance Capital and RComm . In RComm we know the news that the tower sale is likely to happen in the next one month. That is in fact giving support to the stock and is not likely to fall below a certain level which would be Rs 75 which is a strong support.

Similar is the case with Reliance Capital. You have newsflow of strategic investors coming in, selling some divisions etc. Both look to be ruling at the lower end of the trading range. So probably these two stocks can really be good for trading but with a time horizon of a week or so. If somebody keeps a stop loss on a daily basis I don't think they can really make money. For that, you have to be a little courageous and a little bold with a longer-time horizon in these two stocks.

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Chambal Fert Punj Lloyd Tree House
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