In an interview to CNBC-TV18, SP Tulsian of sptulsian.com gives his opinion on the market performance. He says the market is not just bookoing profits but is also experiencing some fatigue. "The focus is shifting more into the odd counters, maybe in the mid-cap or in the other stocks where the ideas are seen to be catching up more by the market. So overall, there's a little caution on the market," he adds.
Also read: How significant are Bernanke's targets?
Below is the edited transcript of Tulsian's intervieww to CNBC-TV18.
Q: Is it just routine profit taking, which has got the Nifty below that 5,850 odd mark? Or is the market nervous about something?
A: I don’t think that this is simply the profit booking. Bank stocks are really seen held up by the market as a part of index management. If you see the private sector bank stocks, like Axis Bank, ICICI Bank, HDFC Bank, and Kotak Mahindra, they have all been struggling to hold their levels. We have been seeing intermittent corrections in those stocks and they are again bouncing back. Bank Nifty has been moving in a range of probably 12,100-12,600.
So, there could be profit booking in those stocks. We have seen some of the profit booking coming in today in cement stocks also, largely in the Holcim twins, ACC and Ambuja Cement. So, that also has dragged it and ITC and HUL both. FMCG sector is also pulling it down.
Overall one can say that there has been some fatigue coupled with profit booking. So, its not only profit booking, but yes, the market is looking weak. Lastly, the focus is shifting more into the odd counters, maybe in the mid-cap or in the other stocks where the ideas are seen to be catching up more by the market. So overall, there’s a little caution on the market.
Q: What are your views with regards to ACC and Ambuja Cement? Shouldn’t there be a bit of a relief rally considering it is not higher than 1 percent?
A: The market is simply going by the simple math that there has been an increase in the royalty payment, so let’s take a negative call. The market was expecting to be at about two percent, but it has come at one percent only. This was earlier anywhere between 0.5-0.6 percent.
So, these are the technical corrections. I am not taking a negative call on this Holcim duo and definitely any fall, maybe Rs 1,375-1,380, could be the good level to enter into ACC. One can again expect a price of Rs 1,430-1,440 in this series. Similar is the case with Ambuja Cement. If you enter into the stock at maybe Rs 202-203, then you have all the chances of seeing it moving to about Rs 210-212 maybe in the next one week or so, ahead of the expiry.
This fall is because weak hands are exiting from the stock and the moment we see any kind of fall by 1-1.5 percent, we see the stop losses also get triggered because lot of trading fervour has been built up in both these stocks. So any corrections further from hereon should be used as an entry point.
Q: How would you approach Tata Motors now because for the past few months, Jaguar Land Rover (JLR) monthly sales numbers disappointed, but last month they rebounded quite a bit. How would you look at Tata Motors now?
A: The JLR numbers have been good, but I won’t be taking that has a trigger for the stocks to really move up by four-five percent. The strong technical hands are probably keeping it ruling at such a high level. I have been keeping my cautious stance on Tata Motors beyond Rs 285, because their present state of the domestic market on the passenger car as well as commercial vehicle are seen little shaky. Things may not be very easy for the company in the month of December in terms of sales and in the month of January as well. Any level above Rs 290 should be used as an exit opportunity and even one can go short above those levels.
Q: What are you hearing on Jet Airways now? It has crossed that Rs 600 mark as well.
A: It is largely the takeover drama which is going on, because it seems that Etihad is a serious buyer. They have now come to zero in whether they go with Kingfisher Airlines or with Jet, because SpiceJet is not being talked about. If one goes by the Kingfisher Airlines model, I am bullish on the stock. I am keeping a positive view since it has been ruling in the single digit. If you really take an economic value of the company, the enterprise value of Kingfisher will probably work at about Rs 15,000-16,000 crore, while Jet will be at about Rs 24,000-25,000 crore.
However, the potential acquirer wants a clean balance sheet. They don’t want any kind of hassles in terms of the debt hanging in the books of the company in the form of the stress assets and maybe the operations coming to a halt. Maybe some news must be coming in, that Etihad is zeroing in on Jet Airways. This is the inside information because of which we see this kind of run-up happening in the stock. If any kind of deal happens at close to about USD 800 million for Etihad on Jet, that can make the stocks to move to about Rs 650-700. So, it must be some inkling in respect to the Etihad-Jet deal going through.
Q: What is your view with regards to ITC?
A: One should wait for a level of about Rs 280 and there the fresh entry can be made. The pressure of the delivery-based selling because of this weightage rejig will definitely be seen and the stock can fall by about Rs 8 to Rs 10.
Q: We have seen the weakest low for the December series which has been pretty much consolidatory in nature, around 60 trading point range barring today. Has it changed your view with regards to the December series now?
A: No. I don’t see it moving beyond 6,000 on the spot basis for the Nifty and as expected, we will probably be seeing those range bound days in a range of about 40 to 50 points on Nifty. There is about nine days from hereon till expiry and there will be four to five days of this range of 40-50 points on the Nifty.
Q: Have you changed your view on any of the non-bank financial companies (NBFC) on the back of the new guidelines?
A: No. I don’t see any kind of negative coming in for those companies. I have kept my positive stance on the gold financing companies like Manappuram and Muthoot Finance, both are looking good. However, overall I have been keeping my mild positive stance because we have seen a huge run-up in all these NBFCs. I am not cautious and I am not even advising profit booking now. One can remain invested barring a few stocks where we have seen a good run-up, like L&T Finance Holdings or SKS Micro, because the kind of run up we have seen in both the stocks warrant the profit booking at the current level.