Tulsian cautious on railway stocks; buy Sintex, Stride, Zee

Ahead of the Railway Budget on February 26, the railway stocks sold-off. In an interview to CNBC-TV18, SP Tulsian of sptulsian.com says that the market is right in being cautious towards Railway stocks.

Talking about broader markets, Tulsian recommends buying Shriram Transport, Stride Arcolab, Sintex Industries and Zee Entertainment for a week or so.

Below is the verbatim transcript of SP Tulsian's interview on CNBC-TV18

Q: We see a lot of buying and selling in railway stocks ahead of Railway Budget. In Friday's trade we saw quite a bit of weakness in the railway stocks. Would you venture at all into the railway stocks ahead of the Rail Budget on 26th?

A: We see four or five stocks always moving up like Titagarh Wagons, Texmaco Rail & Engineering, Kernex Microsystems, Kalindee Rail Nirman, but this time we have seen exactly the reverse. On Friday, all of them were down between 5-8 percent. So, the indications coming in that no specific reference is being made in respect to these companies. Also, whenever you see these stocks moving up pre-Railway Budget, they have always disappointed thereafter. This time market either on the cues coming in from the Railway Budget or as a cautious move, rightly, has taken a negative view on these stocks.

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Q: Do you have any ideas from the broader markets? We did see some amount of recovery in the broader markets last week although that did not last, but as an intra-week trading call would you have any stocks?

A: I have chosen three-four stocks for one week. First is Shriram Transport. Part stake sell by TPG Capital in the company has given an opportunity for one week view and maybe at Rs 715 the stock looks very good which can give a return of three to four percent.

Second stock I am recommending is Stride Arcolab. The sell of its Agila Specialities division to Pfizer for a valuation of over USD 2 billion is again coming into the rounds. On Friday, we have seen the good buying take place in the stock.

Third stock which I am recommending is Sintex Industries. Ahead of its Foreign Currency Convertible Bond (FCCB) payment liability of about Rs 1,200 crore plus on March 12, is likely to sail through. This is because the company has already made the arrangement and the things are again building up. The position in the March series is also seen building-up, so that stock looks good maybe from investment angle as well as from the short-term trading angle.

The last stock which I am looking to buy is Zee Entertainment. The kind of level this stock has held on in spite of the carnage in the recent past, the stock has been holding quite strong at Rs 220. So maybe a gain of about Rs 10-12 in next one week or so makes it a good buy. So, these are the four ideas which I recommend for a week or so.