In an interview with SP Tulsian of sptulsian.com, he explained why he felt the Nifty Future will most likely touch 9,350 by the end of the March series. He also talked about key stocks like Bata, VIP and Apollo Tyres.
Below is the transcript of SP Tulsian's interview to Anuj Singhal and Sonia Shenoy on CNBC-TV18.
Anuj: You had told us, it was Wednesday when we discussed about the market scenario post-exit poll, you had said 9,500 on the Nifty. But you think we are headed there in a hurry now with buying panic or would expect some kind of consolidation before we move?
A: Consolidation is never ruled out. That is a normal process. You can see that happening maybe for a couple of days prior to March 31 also. But let me just give you the rationale for that because firstly, I was on the, I think we discussed this before this exit-poll and at that time, the estimations which were from the close sources and in fact, I would say that from the people, those who have been on the ground that 245 is the seat BJP is going to get and on that premise, I moved with that.
And just to give you one example of March 31, again, some may take this as throwing darts, but on March 31 alone we may see Nifty moving up by 100 points for the simple reason that the new series will start on March 31, so you will be having a premium element. I am referring 9,500 for Nifty Future and not for Nifty Spot. So, on that day, you will be having a 35-40 point premium on the April series.
Then on the first day, if your March series is expiring on a positive note, you always see the gap-up opening on the first day on the new series with an upside of about 40-50 points. And on that day on March 31, as usual, we all will be talking of the NAV prop-up and all that, informed buying seen coming in. So, I will not be surprised to see on March 31 alone, Nifty going up by closer to about 100 points and still I maintain my view that I am expecting the level of 9,350 for the Nifty Future in this series itself. We are now hovering closer to around 200 points away from those levels, but still I am maintaining my view of 9,350.
Since you have asked about the profit booking and consolidation, that will keep coming in. but if you see 2-3 major events, one of the advance tax selling. If you see, having the data of domestic institutional investors (DII), they have not been buyer in this last 3-4 days largely because of the advance tax selling. Today, you have not seen that advance tax selling coming in because this will not serve the purpose because advance tax selling is tomorrow the last date.
Number two, I am banking on the positive Q4 advance tax data which will be a 25 percent instalment and that will be probably be cheering the market. And third will be US Fed rate hike, that event will also be behind us after a couple of days. So, taking all this into consideration, I am keeping my positive stance on this next couple of weeks because you have two weeks away from here on till expiry, maybe two weeks and two days till this March expiry.
So, I am maintaining my view of 9,350 and as I said, March series will expire on March 30 and add about closer to about 100 points, 20 points here and there, a rise on March 31. So closer to about 9,500, I still expect that level of Nifty Future, which I have said last week when we have been discussing in the afternoon show.
Sonia: What is happening in the consumption space? Is it a catch-up post demonetisation recovery that we are seeing and if yes, what would your top-picks be here?
A: Again, it is sad that still we are talking of demonetisation. Sometimes I heard two global experts commenting on the demonetisation, but I have never taken this demonetisation as pain beyond maybe end of November or maybe middle of December. And this is right. In fact, you have to add the housing finance companies also in the same category.
I agree that both are different ballgame, one may argue that the housing finance companies are surging up because of the affordable housing push given by the government and just things have started in that direction. If you have heard the victory speech given by Narendra Modi, his emphasis was purely on 2022, that means houses for all.
So yes, the consumption story has to get linked directly with the rural space. The kind of rabi crop which we will be seeing this season across the board, across India, that will be seen quite positive. And maybe because of that, all these consumption stocks whether you include Bata or VIP, some of them are definitely having some momentum play as well, maybe Bajaj Electricals.
So, these all stocks were lying subdued for quite some time. Maybe market was waiting for the results or these state elections even to be behind us. But I am keeping a positive stance on all these consumption space largely because of the rural play. And probably this theme can go on for the next one month, maybe from April middle or maybe April end when monsoon predictions will start coming in, then probably people will become cautious, but I do not think for at least next 3-4 months this consumption story has to take a break.
Sonia: These are spaces that we have discussed in the past, but between tyre stocks and some of the other auto ancillary companies, do you see more value in tyre companies now because both rubber prices have been falling and now, we know that Chinese imports have also reduced quite a bit.
A: We have discussed this in respect to tyre stocks that what we are seeing, actually I will go more positive in the reduction in the rubber prices which we have seen happening in the global market also and that is making the stocks to move up. If you see the trading pattern of Ceat or maybe Apollo Tyres, in fact Ceat is a high beta stocks so showing the highest momentum or volatility. Whenever we get this raw material prices reduction or the natural rubber prices falling, we see the stocks moving up.
So, I have always said that I do not see any kind of weakness coming in, but there is a cap to the upper limit as well. As regards China, in fact China has seen that probably we will not be having the dumping fears and that has got proved in case of three commodities. One is steel, second is tyre and third is chemicals.
So, I am not so much worried, I do not think that Chinese policy of dumping by capturing the global markets even at a loss well really be working from here on. They have become very prudent and they have taken a decision not to go with the cut-throat competition at a losses. So I will just be keeping an eye on the natural rubber prices, if it falls, then definitely they will be seen positive for the tyre makers.
Anuj: What did you make of the big rally that you had in Asian Paints and Hindustan Unilever (HUL) today?
A: Again, if you take a call on Asian Paints, they have the double benefits. One is of the affordable housing or the housing per se, the kind of blast of the growth which we will be seeing and second is the reduction of the crude prices. We have discussed last week also when we have initiated a buy call and we continue to maintain positive view, in fact all the paint stocks, whether you talk of Berger paints, Asian Paints, Kansai Nerolac or even for that matter, even the Shalimar Paints because you just have 5-6 choices available and that is best, so we are keeping a positive view on Asian Paints.