Wary of IT sector; Bet on L&T, HDIL & cable-TV cos: Tulsian

Stock analyst SP Tulsian of sptulsian.com explains to CNBC-TV18 that he is cautious of the IT sector as the quarterly results are expected to be dismal along with a weak Q3 guidance thanks to the appreciation in the rupee.

The stock analyst adds that he is positive on L&T, realty stock HDIL, cable-TV stocks such as Sun TV and Dish TV, and stocks from the UB Group other than Kingfisher Airlines. Below is an edited transcript of the analysis on CNBCP-TV18.  Q: What do you make of Mayawati's comments on FDI and how do you see this political situation progress?
A: I don't think that statement is really relevant. Though FDI in retail has been approved by the central government, it has been left to the discretion of the states to implement it. The comments indicate an expectation of favours and are politically motivated. Q: How do you approach some of the UB Group stocks? As a trader what would you do with something like United Spirits?
A: I don't think that these stocks are really fit for traders. The inherent volatility has weakened the courage of traders. Based purely on fundamentals I am positive largely on three stocks - United Spirits, United Breweries Holdings and Mangalore Chemicals. And any development regarding the sale of stake in USL will have a positive effect on the share price of Kingfisher Airlines too.
Except for the prevalence of a dismal condition in Kingfisher Airlines and weakness is continuously seen on the stock for all of last week causing the stock to hit lower circuit of 5 percent, I don't think that there is any weakness or fear on any of the other UB group stocks. Q: Between BHEL and L&T, which one would you pick on a dip?
A: I won't go for both because the quarterly results of capital-goods-sector companies do not seem positive for the September quarter. I am positive on L&T which has had a good run-up though the company undertakes infrastructure projects.
On destruction of value and sector rotation, I think the infrastructure sector is the next on the list for an upside. On L&T, my level will be at Rs 1550-1560 and on BHEL, I will take a call at Rs 240-245.
_PAGEBREAK_ Q: What are your views with respect to Reliance? In the last two weeks it has slipped from Rs 875 and to now trade at Rs 815. Are you expecting to see any disappointment in the quarter’s results?
A: I do not expect any positive surprises. The company touched a bottom when it announced its Q1 results with a profit before tax (PBT) of Rs 5,500 crore and PAT of close to about Rs 4,500 crore.
The upside which is expected by the market will be on the performance of the company's petrochemicals business. I don’t think that even an expectation of a PBT of about Rs 5,750 or maybe Rs 5,800 crore, will cheer the market because that will take the FY13 EPS to Rs 61-62.
So, with some caution, my price-range will be at Rs 810 because I’m wary of October series on the Nifty as well the Bank Nifty. Q: If your view is that October may not turn out to be a good series for the market, what kind of base do you see for the Nifty?
A: I forecast a correction of maybe about 800 points on the Bank Nifty with a call of 10,500-10,600. All the bank stocks are getting tired. So, I am negative on the Bank Nifty, I am cautious on the IT sector because the results may not be cheerful and further optimism will be reduced when the Q3 guidance starts factoring-in the strong rupee.
These two factors will really drag the Nifty down and I estimate 5,450 as the base with the strong resistance at 5,850 till the expiry of the October series. If correction brings the Nifty down to about 5,500, it will probably aid creating a positive or bullish scenario in the November series. Q: In the anticipation of digitisation, Dish TV has rallied quite a bit. How much more of an upside do you expect in the stock and as the October 31 deadline nears, would you advise booking profits?
A: If you have a long-term view, then I don’t think that there is any reason to exit from stocks like Sun TV, Dish TV, Hathway and Den Network. In fact, there has been a pause on Den Network  and Hathway. If you are investor and wish to take a call over three-to-four months, all four stocks are lucrative. For traders, the price-band of Rs 88-89 may be the level to exit and book profits in Dish TV. Q: Do you see more upside in any of the real estate stocks?
A: One has to be selective after the big run-up posted by many of the stocks. But I am positive on Indiabulls Real Estate and HDIL which have a strong  presence in Mumbai’s property market.