PN Vijay sees mkts trading volatile in Feb, suggests buys

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PN Vijay sees mkts trading volatile in Feb, suggests buys

In an interview with CNBC-TV18, PN Vijay, Portfolio Manager, spoke about his reading on the markets.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Markets may consolidate at current levels: An analysis Nifty may open weak, trade in 4900-4950 range today ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 29/05/12 Are Mutual Funds betting on Nifty? Other Stocks in this news Hindustan Petroleum Corporation | Bharat Petroleum Corporation | NTPC | Larsen and Toubro | State Bank of India |

Portfolio Manager PN Vijay expects volatility to continue till the Budget.

He is bullish on oil marketing companies post the Kirit Parekh Committee's recommendations. "They are excellent assets. The type of franchise they have, and with the entry barriers that are there on putting up a distribution system cannot be replicated easily. A lot depends on the next ten days and how quickly the Cabinet takes that up but we are this morning going to be relook at IOC, HPCL and BPCL.

He is a bit more confident on public sector banks post their Q3 numbers, and recommends Bank of Baroda.

Here is a verbatim transcript of an exclusive interview with PN Vijay on CNBC-TV18. Also watch the accompanying video.

Q: It's been quite volatile these last few days. Do you expect it to continue till the Budget or do you think we have seen most of it?

A: We will surely have volatility and the reason is that we are getting some conflicting cues. Global cues are tending to be rather mixed, whereas in India the cues seem to be pretty strong though there is inflation and how fast it will go and what is the base effect, etc. It's not a one-way street. I do not think the type of precipitous fall we had more than 6% in January should be there. The market should stabilise around these levels. We have to live with volatility, especially since it is a month of Budget.

Q: What did you make of the Kirit Parikh recommendations put forward yesterday? How much do you think might come through?

A: There is not a cynicism. When the National Democratic Party (NDA) was in power, we had the Rangarajan Committee which went into a very big roadmap for stage by stage decontrol of petro product prices pursuant to that the NDA did for three years have a 15 day reset for petrol. Diesel and kerosene prices were increased about 50% that was way back in 2002. After that the whole issue of petroleum pricing has got locked into totally political tomfoolery.

I get the sense this time that the new avatar of United Progressive Alliance (UPA) wants to do this because the political sphere has practically vacuumed right now. The Communists nursing their wounds and busy in West Bengal, the Opposition is fairly disunited. Hence, this is a time when Dr Manmohan Singh, who is really committed to fiscal prudence, will be able to push through sometime. We will get petroleum and diesel prices freed. I think that will happen whether he will be able to raise kerosene prices by Rs 6, probably a bit less, but this time Kirit Parikh maybe able to get away with things unlike other committees of the government on this particular issue.

Q: Would you bet on oil stocks now, the public sector universe?

A: We are thinking of that because these OMCs are excellent assets. The type of franchise they have with the type of barriers to entry that is there on putting up a distribution system as to what IOC , HPCL or BPCL has. You cannot replicate it. Its not mobile telephones where you just put some tower and you are in business. You have to lay pipelines and have refineries close by. You also need tankers.

So it's a huge network. Due to the pricing they have for the last five years, they have been doing nothing except some trading activity. Possibly, this was one sector which used to be a darling of the market since the 90s that may get back. A lot depends on the next ten days and how quickly the cabinet takes that up, etc. but we are going to relook at all these three companies.