Positive on Bank Nifty with target of 13500-13600: Tulsian

SP Tulsian, sptulsian.com shared his reading and outlook on stocks land market.

On Nalco he said the numbers were good but one is not sure that these numbers will sustain or not. HDIL continues to remain weak, so will stay away from that. Speaking on the February series he said, “I will keep positive stance on the February series and expect t the Nifty Future to move to a level of about 6,300 or so. I am keeping the same positive stance on the Bank Nifty also, with a target of 13,500-13,600.” There could be an upside of around Rs 18-20 for Titan Industries in February and so maybe a good buy for traders and investors, he added Below is the edited transcript of his interview on CNBC-TV18 Q: Have you taken a look at Nalco’s numbers? A: I have seen Nalco’s numbers and the numbers have really been very good. In fact that is what is reflected into the share price also. However, the problem with Nalco is that you cannot be sure these kinds of numbers will sustain or not going forward. Q: Any view with regards to what’s happening with HDIL? That stock is down around four percent. Would you be a buyer at Rs 77? A: Post this carnage which we have seen in HDIL, the market has never got any kind of respite except for one day, when share moved by about 10 percent for the first two-three days carnage where we saw good delivery based selling having seen from the promoters as well as from the institutional investors. One day upmove of about 10 percent which made the stock to move to Rs 82-83 was largely seen because of the short covering. Whenever you see this kind of fall in any stock, you see the shorts also start because those who have been following the trend, they go aggressive and go short. The short covering got over maybe in a day, and now hereafter obviously because of the concerns still remaining with respect to one or two listed real estate companies also that they have not been able to honour their debt obligations and all that. This concern continues to remain on HDIL because still the reasons are not known. How much problems still remain in the company and that is the reason no renewed buying interest is coming back. With higher institutional investors, especially from the FIIs in the stock, whenever they come for selling in the stock then there are no buyers to lend support with the kind of quantity that is getting sold. So, the share will still continue to remain weak. If you take the technical call, Rs 70 looks to be the reasonable support where the fundamental value starts coming in or maybe starts getting reflected into the price where we may see some kind of renewed buying interest coming back at those levels. Till then, I will keep my negative bias on the stock and will remain away. Q: What is the feeling that you are getting about the February series? Do you think this market will exhibit fatigue and consolidation in absence of any major trigger or so you think this uptrend will continue into February? A: I am keeping my positive stance for February. The biggest trigger for February will be the Budget expectations. By the first week of February we will have all results out. In fact, the dullness or maybe the range bound behaviour which we have been seeing in the index is again more to do with the index management. We had discussed this couple of days back also on Monday when the series remained with four days of expiry that it is likely to end not below 6,000 and not above 6,100. This kind of index management is being done. That’s the reason today all the PSU banking stocks are quite dull. Inspite of that we are seeing Bank Nifty ruling quite high because of the private sector stocks really doing well like Axis Bank, HDFC Bank, ICICI Bank. I will keep positive stance on the February series and expect that probably the Nifty Future can move to a level of about 6300 or so. I am keeping the same positive stance on the Bank Nifty also with a target of 13,500-13,600. Q: What would you do with a stock like Titan Industries now after looking at the numbers? It was expected to be strong this quarter but now after expensive valuations would you sell it if you owned it? A: If you see the price behaviour, it has been ruling quite low maybe in the range of Rs 260-270. They have demonstrated better results on Q3 because of the higher volume growth. Maybe the EBIT margin which was at 9.8 percent was in double digit for Q2 because the EBIT was at Rs 215 crore for Q2. So, there is a drop in the margin but maybe during the festive season because they have to capture the market share or maybe the larger portion they have done that. I won’t be seeing much downside from hereon and even maybe the upside of about Rs 20 can be expected in the February series from hereon. This makes a good buy for the traders as well as for the investors because even if you expect Rs 18-20 upside from here, that gives you a return of close to about 6-6.5 percent. Q: Any view with regards to a lot of these banks which have come out with earnings, how did they look to you Dena Bank, Indian Overseas Bank (IOB) and Central Bank? A: I am satisfied with the results of the Central Bank. If you knock-off the old gross non-performing assets (NPA) and net NPA, althoough there has been control on the net NPA maybe virtually at the flat basis. Gross NPA has risen by 10 bps but that is not such a big concern. However, I don’t think that same can be held on for the other two banks who have also posted the numbers. It is a mix reaction. I don’t think that one can take a conclusion that overall the bank results have been very satisfying or maybe good from all the PSU banks. There has been mixed posting by all of them. _PAGEBREAK_ Q: There is that Cabinet Committee on Investment (CCI) meeting to address the issue of that no-go tag that was assigned to many of these oil and gas blocks. What is your expectation on that front and how much should one expect with respect to Reliance Industries itself? A: Seem to be positive for Reliance Industries; I won’t be able to take a guess on what could be the outcome of that meet; how they will be structuring that decision and all that but it is seen to be quite positive for Reliance Industries. If some positive indications come in, that can be seen as a new positive trigger for the stock to move up from hereon. Q: You were telling us about your estimates in terms of a floor price for the Oil India offer for sale (OFS) but now how would you approach the stock, the approval has come through, the stock is actually down 2.5 percent. A: That is right in fact if you recall earlier I gave a floor price of about Rs 520 but now since the secondary market has corrected and now it is ruling at about Rs 525, largely it has to do with the OFS. Generally we see that ahead of OFS, it gets corrected to a great extent. However, if you take the revised scenario I still maintain that government should stick to the valuation of Rs 520 because on a relative basis if you see Oil and Natural Gas Corporation (ONGC) has not corrected to that extent. Always ONGC and Oil India there is link in respect to their valuation. Again, about 6 crore shares will be put for the OFS that makes fund mobilization of close to about Rs 3000 crore. So, that should not be seen as a very big amount.  I still maintain that floor price should be kept at about Rs 520. But looking at the way the government has been pricing the issue; in case of National Mineral Development Corporation (NMDC) we have seen that they don’t want to take any chances of not going through these OFS. In that case they may be a little careful and may put a floor price of close to about Rs 500 but in my view it should not be less than Rs 520. Q: Do you see a lot of soaking up with regards to the Oil India issue by FIIs, you don’t see it as a problem in terms of sailing through? A: This 6 crore shares which will be put on the block, I don’t think that there should be any kind of problem. In fact I see strong appetite. The way even the Finance Minister has presented the case of India and the road shows and whatever information we have gathered, also the feedback, the response has been good. Good interest has been shown by the FIIs.  In my view there will be good response in the issue. The company is seen as a quite good. Actually, in the upstream if you want to make a choice between ONGC and Oil India some of the institutional investors are taking a more positive call on Oil India instead of ONGC. It should be able to sail through. I don’t think that LIC will have to come to the rescue. If they come of their own as an investment decision, that is a different case. I don’t think that there should be any kind of under-subscription worry. The response seems to be good from the overseas investor. Q: The government has made certain indications about one public sector undertakings (PSU) stake sale every fortnight. Post this Oil India offer for sale (OFS) which one would you keenly be watching out for? Although it’s very marginal with respect to that entire Rs 30,000 crore disinvestment target, what is your view on how the government will be able to bring about this target out, by the time the Budget comes?  A: Now you have 8 weeks with you and since you have said that every two weeks there will be one issue lined up. So, may be the Budget preparation and the Budget presentation may take away about one or two weeks. So, one should safely assume three to four, offer for sale from the government.  The first will obviously be Oil India; second I am expecting it to be National Thermal Power Corporation (NTPC), which will be a very bigger one because the government is thinking of mobilizing Rs 12-13000 crore from that issue. Third could be Engineers India Limited and probably I will stop there because you don’t have clarity thereafter on which issue will really be taken up by the government. They have been dilly-dallying or deliberating on many other issues as well, like Steel Authority of India (SAIL) and one or two issues more. These three issues look certain, Oil India, NTPC and Engineers India in this financial year. Q: Wanted to check with you on Uttam Galva and the big spike up that we have seen on that particular name. Anything that you are picking up because apparently there are some talks that ArcelorMittal could be looking to buy out the Miglani’s family stake? A: If you look at the upside, the stock has moved from Rs 80-85 to about Rs 120 in the last one week. In fact when the ArcelorMittal has come in this company jointly with Miglani Brothers or the Miglani family, there was no reason for the ArcelorMittal to have the joint venture with them. Since they have the eventual plan, now Uttam Galva is just a converter. They buy hot rolled (HR) coil or cold rolled (CR) coil and convert into galvanised plain/corrugated (GP/GC) where there is no margin. So, the larger picture remains ahead and this will be the real platform by the ArcelorMittal to expand and make it an integrated company with HR coil and with making the CR coil and ultimately to GP/GC.  So, definitely they will be buying, in fact there was talk earlier also that they are looking to acquire some of the companies including maybe one or two steel producers like Bhushan Steel etc  although I don’t know how far that will pan out from hereon.  There seems to be substance that probably ArcelorMittal will be making this company as a single promoter buying out the Miglani Brothers, which is likely. Considering the up move, which we have seen of about maybe 40 percent in the stock price or maybe 40-45 percent indicates that event happening.
    more to come.