Infra sector, Mannapuram & Suzlon best bets: Tulsian

Market analyst SP Tulsian of sptulsian.com, in his analysis of the day's stocks on CNBC-TV18, explains with increased access to funds, infrastructure stocks have the most allure despite the heavy debt in the books of the larger companies.

He is poisitive about Mannapuram on indications of little effect by the RBI regulations. Suzlon's sale of assets and debt-reduction measures in order to repay the first tranche of FCCBs has placed the stock high on the Tulsian's favourites. Below is an edited transcript of the analysis on CNBC-TV18. Also watch the accompanying videos. Q: Any company-specific reactions?
A: I think the infrastructure stocks will be in focus because of the likely flow funds which they maybe able to acquire. So investors can keep an eye on infra stocks, including large companies with huge debt, such as GMR, GVK and IVRCL. Q: The amount of USD 10 billion looks so good that companies think they can raise ECBs. But will they actually be able to raise money so easily?
A: There are projects worthy of investment but they are derailed by regulatory hurdles. So I do not think that merely raising limits by the government is sufficient. This needs to be supplemented by other policy announcements.
There is increased overseas interest in a lot of projects in the road sector. But it all depends on the regulatory hurdles. Q: What is the right way to approach this market with high expectations from New Delhi over the next fortnight?
A: It is better to focus on the July series which is likely to be positive. It is highly possible that the expiry of the June series will close at 5,200.
In the July series, investors can expect a rise of about 200-250 points. However the market may find it difficult to move past 5,450 despite major policy initiatives by the government especially the increase in diesel prices.
If crude prices continue to soften and the rupee starts to appreciate to 54- 55, it will be a big relief coupled with monsoon. So it is better to focus as a positional trader instead of taking hourly or daily calls and avoid dabbling in the June series.
So taking a view for a couple of weeks in the July series, investors can focus on banking stocks or rate sensitive sectors like real estate and automobiles. Q: What are your thoughts on Mannapuram which had quite a good run today and was last week’s big gainer as well?
A: For the last two days, there has been huge delivery-based buying. The delivery percentage on Friday was quite high being four times the average daily turnover.
So that indicates that informed buying is taking its toll on the stock and is witnessing accumulation. The process of accumulation was seen in the last couple of weeks and indicated the probability of a breakout.
I don't think there is much fear about the effect of RBI regulations on gold finance companies. So all this indicates delivery-based or investment buying and could take the share to about Rs 32 in a month or so. Q: How much of an upside would you expect to see on Coal India?
A: The stock has seen profit booking come in at Rs 345-348 generally. In the last six months, on close to 10 occasions profit has come in at those levels with buying coming back at a level of about Rs 315 or so.
So I maintain my view that the level of Rs 315-345 is a tight range for the stock in which it has been trading and I will continue to respect that trading range for the next couple of months as well. Q: Suzlon is attempting to sell assets, reduce their debt etc. At a level of about Rs 18, do you see the risk-reward is very high now or would you avoid the stock?
A: I am positive regarding the stock. The sale of their China unit for about Rs 350 crore indicates mobilisation of funds for retirement of the first tranche of FCCBs that falls in the last week of July worth USD 300 million.
Generally, in many of the cases where companies have raised amounts to retire old FCCBs, the market has not been very kind to them. But here, because of the efforts to retire at least 20% of the FCCB, I am quite hopeful.
I maintain a positive view. The stock will be able to give a return of about 20% and investors can expect a price of Rs 20 in the next 45 days or so.