SENSEX NIFTY
Jan 14, 2013, 06.51 PM IST | Source: CNBC-TV18

Optimistic on GAAR deferral; buy HDIL, PSU banks: Tulsian

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com said that the deferral of GAAR to 2016 is a positive move. RBI is likely to cut rates and the PSU banking stocks that are likely to be affected by the rate cut have started moving up already.

After the Indian government deferred the general anti avoidance rule (GAAR) today , the Indian market soared with the Nifty gaining 72 points to close at 6024 and the Sensex 243 points to close at 19906. The market did not show any major movement after December inflation slowed down to 7.18 percent versus 7.24 percent in November , raising hope for an interest rate reduction by the Reserve Bank of India (RBI) in its January policy meet.

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com said that the deferral of GAAR to 2016 is a positive move. RBI is likely to cut rates and the PSU banking stocks that are likely to be affected by the rate cut have started moving up already.

Further Tulsian is bullish on HDIL and Unitech , as both these stocks look good, in terms of the fundamentals as well as the technical behaviour in the F&O space. As RBI is likely to cut rates larger PSU bank stocks like State Bank of India ( SBI ), Punjab national bank ( PNB ), Bank of Baroda , Canara Bank , Bank of India are moving up and may see a further upside.

Below is an edited transcript of Tulsian's interview on CNBC-TV18

Q: The market did not react to the inflation number too much, It is only when the details on GAAR came out and the deferral of the implementation that the market actually saw a bit of a momentum on the upside according to you how much of a relief does it come as this deferral till 2016?

A: This is a very positive move and very much on the expected line that the GAAR will get deferred by a couple of years. If one sees it probably has to coincide this with Budget also of 2014. When the Budget will get presented, that will happen only in the month of June or July so, I don’t think this was possible for any finance minister to make an announcements that the GAAR will be applicable from 2015. Maybe circumstances have complied the government to make it from 2016 which has seen very positive.

We have not seen any kind of relief coming in after the inflation number but may have taken one hour or so for the market to digest and adjust. On the hopes of the rate cut we are seeing that the rate cuts seems to be most likely. We are seeing all the rate sensitive stocks have started moving up. If one sees the PSU banking stocks as huge beneficiary of this expected rate cut along with the rate sensitive’s more especially in the real estate sector. Many of the stocks have started moving up, maybe the combine effect of that has come after the GAAR announcements by the finance minister.

Q: DLF is 6.5 percent up move. There is a brokerage upgrade but we have seen several of that come and go fundamentally how much do you think DLF deserves in terms of a stock movement?

A: Yes, the research reports come and go. It is very important to see these prices sustaining. We have not seen prices sustaining for DLF. We have been seeing a very good trend emerging into Unitech, which has been continuously going up, forming higher top higher bottom. The stock has seen under accumulation and that kind of comfort is not coming in from DLF.

They have gone ahead and the debt reduction process has started by the company. They have exited from their Mumbai property, they have exited from their Aman Resorts except the Lodi Hotel and that is going to get their debt burden reduced. Maybe by March, they should be able to reduce it by Rs 6,000 to Rs 7,000 crore because some of the projects that have been launched by them in Gurgaon will also give them good liquidity which will not get reflected into their financial performance but will improve their cash flow by a good margin.

Overall, things are positive on that front but is not happening in pace as expected. I will keep a cautious stance. If one really wants to take a view on some of the real estate stocks two stocks from the Futures and Options (F&O) space are HDIL and Unitech. Both the stocks are looking quite good in terms of the fundamentals as well as the technical behaviour.

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READ MORE ON  GAAR, Nifty, Sensex, RBI, PSU, Budget 2013, EPS, PAT, NIMs, NPAs
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