Nifty may trade in 5650 range this week: Tulsian

SP Tulsian of sptulsian, says that may be 5650 will be seen for the whole of the week. Even if Mamta takes an extreme view of moving out of the UPA but lending support from outside, I don’t think that will be seen too negative. But market may remain bit cautious and from Monday onwards till expiry because next week we will be having the expiry week. There again we may see the positive momentum continuing and 5750 could be the level which I wont stretch it beyond till the expiry.

Below is the edited transcript of his interview to CNBC-TV18. Q: What is your fundamental view on the markets because it is definitely – we are showing a bit of a relative outperformance as compared to the European markets? Is it the political anticipation which is holding us up today?
A: Yes, political anticipation is holding up, but apart from that you have just highlighted the rise in the public sector banking stocks having moved up between 6-8% in respect to PNB, Union Bank, UCO Bank. Ninety percent of the experts are taking a negative call on all PSU banking stocks on asset quality concerns.
This month Canara Bank was ruling at 52 week low at Rs 306 and now it is ruling close to Rs 375-380, which means we could be able to see a rise of above 25% in less than 15 or 20 days. This kind of built up or the positive bias starts happening on these stocks.
Similar is the case with many stocks like PNB and Bank of Baroda, I am excluding SBI fro this space and similar is the case with the smaller ones. Oriental Bank of Commerce and Union Bank is a case in point. So, definitely people are now shifting because the same thing is happening in respect to the profit booking because all along the defensives were taking the front seat for making investments be it IT, FMCG or pharma.
They are all on the backseat and similarly in the banking space the private sector banking stocks are now going on the backseat and largely the public sector stocks have come on the frontseat because of its valuations because they were all ruling at a price to book of 0.6-0.65 and even the PE multiple of 4-4.5.
So, definitely it is a valuation call led by the political move and the kind of reform process having initiated largely in the infra space. Even the sticky exposure of may be about Rs 50,000-70,000 crore in aviation sector is also changing the view or may be not seen to be so sticky assets going forward because may be the bankers will be able to realize from the Kingfisher Airlines, similar is the case with Air India and so many other things. The perception has changed but that has seen more in respect to the banking and financial stocks which has partly its reflection seen on the rate sensitive’s, largely on the real estate again purely because of the asset valuation call all those companies have been holding in the form of real estate. Q: The next government move is now expected on the power space, there is a cabinet meeting on Thursday where they are proposing the restructuring of SEBs, playing into this event, which stocks would you look at?
A: This will really be a very big move because the financial health of all discoms has been largely instrumental for spoiling the health of the power generation company. Neyveli Lignite, which operates in Tamil Nadu, has 80% of their exposure or realizations not coming in from the Tamil Nadu State Electricity Board and similar is the case with many of the power generators as well as the power financing companies. So, if you want to chronologically sequence these sectors, which will really, be benefitted by this move because government is now contemplating whatever amount or the dues will be monetised and 50% of that will be borne by the state government in the form of the debentures or the funding.
So that will really be quite positive for the financing units, which have been financing to these power companies especially Power Finance Corporation and Rural Electrification Corporation, followed by the power generating companies like Adani Power, Tata Power, JSW Energy, Reliance Power, Indiabulls Power. All the power generating stocks will have a positive impact coming in and thirdly will be the capital goods companies because once the revival of the power industry happens the new capacity creation will start happening again.
It is heard that BHEL features in their model portfolio list. So again, the buying in capital goods will also start. So maybe the pattern of the up move will be seen first in the financing companies, then the power generation, and then the capital goods. Q: If Mamata Banerjee decides to revoke support from the Centre, what could be the market reaction?
A: Market may see weakness in near term because people have been sitting on huge profits and in fact no long traders will take the risk and if this news comes out, we may see the profit booking happening. Otherwise, cautious traders will go for profit booking. So, we may see some softness coming in ahead of the market remaining closed tomorrow. Q: You were earlier talking about the market pausing around this 5650. Do you think that is it for the moment or the market might take off again after catching a breather?
A: Maybe 5650 will be seen for the whole of the week. Even if Mamta takes an extreme view of moving out of the UPA but lending support from outside, I don’t think that will be seen too negative. But market may remain bit cautious and from Monday onwards till expiry because next week we will be having the expiry week. There again we may see the positive momentum continuing and 5750 could be the level which I wont stretch it beyond till the expiry.