Correction mainly led by infra, realty names: SP Tulsian

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According to SP Tulsian of sptulsian.com, the correction in the market has started. "Today's fall was mainly lead by infrastructure and realty names, but soon the Bank Nifty will also follow," he said in an exclusive interview to CNBC-TV18.

Going forward, he sees the metal index contribute some strength to the market.

Below is an edited transcript of his interview with Udayan Mukherjee and Sonia Shenoy. Also watch the accompanying video.

Q: What is your word on Nagarjuna Construction?

A: The results have been really very bad and obviously you cannot take any comfort with such numbers. If you take a call on all infra stocks on the whole, they are now due for correction whether it is IVRCL, Suzlon, GMR Infra or GVK Power. The kind of run up we have seen in these stocks in last month is anywhere between 60-100% and I don't think they can really keep it up.

On the upside, I think one can include names like Sintex or Voltas which have lately been moving. However I am surprised that Tata Power didn't correct today. Taking a cue from Adani Power's results and the kind of increase in the raw material costs which was seen, I was expecting Tata Power to be down today by about 4-5% but that has been holding on probably largely because of this strong trading grip.

So if you take an overall call on all these infra stocks, the kind of run up they have seen in last 15 days to one month was required for profit booking which has come maybe in the form of subdued results from Adani Power and Nagarjuna Construction.

Q: Do you think your awaited correction has begun?

A: It looks like it. If you see, the correction has first started in infrastructure stocks, but I am not saying that everything is getting reflected in the index. The main index which is really holding on is the Bank Nifty. If you see today also the Bank Nifty was up by about 200 points and some banks like Yes Bank, State Bank of India have been very active. So I think that the correction has been triggered mainly by infrastructure stocks and real estate names, because even the realty index has contributed a lot. So probably that will get accelerated by the Bank Nifty going from hereon.

I think the metal index will contribute at the end. I have my most comfort on the metal stocks in spite of them having seen a good run up names like Hindustan Zinc, Sterlite Industries. So I am expecting Bank Nifty again to start pulling down the Nifty.

Q: How would you read the delay in the NTPC order and how material could it be?

A: Overall it is quite negative from the NTPC point of view. The ramp up of their generation capacity of 32,000 megawatt to 50,000 megawatt will get delayed. If you take the case in reference to the BGR, already we have seen 33% drop yesterday in the results posted by the company in top-line as well as bottom-line. EPS for the quarter was also low at Rs 8 compared to Rs 12 in the corresponding quarter.

All these orders otherwise also has to get executed within a period of 24 to 36 months. Even if it gets delayed by next 4 to 6 months the two quarter results is likely to get affected so I won't be surprised to see BGR Energy correcting further about Rs 210 to Rs 215 because the stock has risen in line with all other capital goods stocks like ABB, BHEL, Siemens. L&T so even this stock has risen quite a lot so probably still some correction in case of BGR can be seen to the extent of Rs 15 to Rs 20.

Q: What about the impact that it would have on BHEL?

A: Equally negative, but in case of BHEL again the disinvestment news also will play a big role. It will be equally negative for L&T as well. But since BHEL has a longer pipeline and they have a larger order book, this will be more impacting the companies like BGR Energy and all sorts of things.