RIL would appeal if buyback exceeded 12 cr shares: Tulsian

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RIL would appeal if buyback exceeded 12 cr shares: Tulsian

SP Tulsian of sptulsian.com spoke to CNBC-TV18 about the where he sees the stock of Reliance Industries moving and what the future holds for the stock. He says that Reliance Industries should have opted not to put cap on number of shares in the buyback programme.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » 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

SP Tulsian of sptulsian.com spoke to CNBC-TV18 about the where he sees the market moving and what his takes are on certain stocks in news such as Reliance Industries . He says that Reliance Industries should have opted not to put cap on number of shares in the buyback programme. "The stock could move above Rs 750, but will not trade higher for the larger part of the day," he says.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: The consensus here seems to be that there will not be too much of a fall in the Reliance. What do you think?

A: I tend to disagree here. I have heard a lot of opinion on the buyback. I am not happy with the kind of cap they have made of 12 crore shares. Take the case of Rs 10,440 crore which has been allocated and calculated on 12 crore shares at Rs 870 per share. Even if the buyback happens for the entire 12 crore shares, it may come at an average price of Rs 800 per share in the worst case scenario or Rs 750 in best case scenario. Assume if they would have not kept this 12 crore as a cap on the number of shares; they should have kept this amount open at Rs 10,440 crore; it would have resulted in a buyback of 13 crore shares at Rs 800 and 14 crore shares at Rs 750. Probably that would have looked little better. I agree that the stock will not fall below the floor price of Rs 700-720 since the basic objective of the buyback will get defeated. We all know that 25% has to be spent under the new SEBI rules. So I am not too gung-ho and happy with the kind of capping made on the absolute number of shares under this buyback program.

Q: The big move was in real estate on Friday. Stocks like Indiabulls Realty did very well. How would you trade now?

A: There are positional shorts in the Indiabulls Real Estate. For last three months the stock has been on a continuous declining trend and that has given a lot of confidence and comfort to the bears to go short on this stock. Despite news of environment clearance, I am not too bullish on the stock. Yes, the short covering has happened but that should come to an end. If you see the pattern of HDIL , it has in fact shown a declining trend on Friday. Even in case of DLF , in spite of hearing so much of the asset sales by the company, we have not seen major upside in the stock because technicals are not in favour of DLF. But in case of Indiabulls Real Estate short positions still exists. So maybe a renewed buying interest has led to the huge short covering in the stock which should come to an end maximum by the expiry of this series. But for February series Indiabulls Real Estate will underperform.

Q: Believable, a 6% cut in Reliance or is that too much?

A: I am expecting it to get Rs 750 plus/minus Rs 5 for major part of the day. I won't be able to take a call for 10-15 minutes. But I don't see any reason for the stock to trade above Rs 750 fro major part of the day.

Q: Would you buy it at Rs 750 or let it be?

A: Probably Rs 720 will be the ideal level for entering into because if you have a bearish view ahead after the expiry of January series, and the Reliance has a lot of trading component now from here on going forward. I don't think that there is any fundamental news. So, one has to really play on the trading flavour on the stock. In that scenario, I will look to enter only at Rs 720, not above those levels.

Q: How do you read the recent news flow on Coal India which has pegged it back a bit?

A: Mildly disappointing. But I have been maintaining my view that I don't see it moving beyond Rs 350-355. That's the reason in fact the profit booking call was given by me at about Rs 345-350 which I recommended at the beginning of this series at Rs 310-315. So probably, Coal India is likely to trade in the range of Rs 310-350 at least for next couple of months because these kinds of news flows will keep coming in. You don't have much hope on the realization front that anything can really help which can make the share to move beyond Rs 350.

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