Nifty may not fall below 5350; selective on infra: Tulsian

SP Tulsian, of sptulsian.com, says that he expect the Nifty to not fall below 5350 level. Bank Nifty has reached a level of 11400-11500. Bank Nifty can again fall to a low of 10200 as Bank Nifty is exhibiting the maximum activity.

Below is the edited transcript of his interview to CNBC-TV18. Q: What is your view on the comments made by Samajwadi Parties and where to you see this heading now?
A: At this stage, the support of Samajwadi Party has strengthened the UPA-II and now at this stage for their survival they have on one hand Samajwadi Party and BSP on the other.
The stability or the survival of the UPA-II is not now in question. There will be continuation of reforms. The withholding tax has been reduced to 5% from 20% on all forex loan which was earlier available only to the infra loans and activation of Rajiv Gandhi Equity Scheme is very positive. Things are looking positive for the government, reforms and market. Q: How would be the primary beneficiaries with respect to the foreign currency borrowers that would benefit from cut in withholding tax?
A: I am unsure how many companies will be able to renegotiate because this withholding tax of 5 percent should be seen as a TDS. Suppose if this would have been from a domestic lender then TDS credit would have gone but if the amount is lend by foreign lender he considers this tax as expense. Ultimately they see the net returns what they are getting. Earlier they were getting interest rates minus 20 percent now they will be getting interest rate minus 5 percent. I doubt if infra companies will be able to re-negotiate their forex loans in their books and bring down it down.
If you take average interest cost of about 6 percent and 15 basis points saving on that gives a saving of 90 bps. I doubt whether they can compel the lender to reduce the interest rate by 50 bps to 75 bps but going forward from hereon Tata Steel can be looked. The lower interest rate loan can definitely be swapped with the higher interest loan which they have availed earlier. So there will be little transformation.
Maybe the shake out, readjustment will happen in three- six months. This will open the window for the new loans now getting raised very quickly by the companies those who are in need of funds. Even on the currency front, people have understood that rupee cannot weaken beyond 56-57 and once the inflow start coming in then the currency fall to about 50 strengthening to the level of 50.51.
One has to factor all these things whether they will be taking a hedge against the fresh loans which they will be availing. Things will become easy for the new borrowers and the strong companies which have already availed the forex loan can go for a reduction of 50-75 bps. Q: What is the sense that you are getting, for the markets at these levels how much more is the market pricing in, in terms of incremental reforms from here and realistically what more do you think can come through?
A: Discom debt restructuring will be a very big reform. After that I don’t think that any of the moves can be taken as a very big move except DTC and GST which both are unlikely because that cannot really happen. Once the debt restructuring of discom happens then it will improving the health of the power financials, capital goods makers and power producers. If the momentum comes back we may see investment of Rs 4 lakh crore coming in the sector which is a positive move from market point of view. I expect this reform to happen in next 15-20 days. Q: What are you doing now, booking profits or do you think some of the facts around the market have changed and they may warrant more upside in the near term?
A: I have a target of 5750 on the Nifty. Things may remain positive till the expiry. I will keep a cautious view in the last two days when the shifting or rollover will start to happen. If you see the trend then there is not much upside beyond 50 points on the Nifty from hereon. Today, we have already seen power finance companies, PSU banks, capital goods makers, power generating companies all having run-up by about 5-10% in anticipation of discom debt restructuring. So, I have a cautious stance. 
At this stage, I will not create any long position except in pharma stocks and there also I will be very selective. Stocks like Ranbaxy, Divi's Labs and Wockhardt can be picked from a trader's point of view. Yes, the cautious stand will definitely remain because October series is seen bit cautious and may be once the rollover will start happening things may seem little subdued or may be range bound on Wednesday and Thursday. Q: Do you see the next leg of the up move involve retail participation because we have seen retail stay out for now and generally towards the last leg of an up move retail starts to come in where are you on that argument?
A: It is true that they always come at the last leg. They never pull up the market because they just come to lose money in the trading because generally the behavior of the retail traders is very impulsive- even an investor in the retail segment will first ask for stop loss. I don't think that is a right approach of entering into the market at this stage.
In PSU banking stock, Canara Bank can move by 40 percent in the last 15 days – is there any point in entering now because 15 days back we all have been talking about the asset quality, concerns on the PSU banks so what has led for this 40 percent rise in Canara Bank? Now a retail investor will definitely get convinced for Canara Bank at Rs 430 which he was not agreeing or getting convinced at Rs 310.
They will be entering at the last leg but they never pull up the market. They just come to lose money in trading and I will be keeping my cautious stance. Generally, if you see the history has always said that October series, May and October have always been the weak series.
Take the case of momentum flow or the policy initiative by the market can keep the two weeks again. October is four week series. You may see first two weeks having some positive sentiments but I am very cautious for the last two weeks of October series but keeping my cautious stance on the market. Q: What levels do you see the Nifty correcting to in the event of an October correction?
A: I expect the Nifty to not fall below 5350 level. Bank Nifty has reached a level of 11400-11500. Bank Nifty can again fall to a low of 10200 as Bank Nifty is exhibiting the maximum activity.
Many traders are making money more into the Bank Nifty because of its swift move on both the sides. For the Nifty, 5350 is a good support and for the Bank Nifty, 10200 is a good support for the whole of October series. Q: Should one enter or stay away from the infrastructure space?
A: One has to really demarcate. I have a positive view on stock like IVRCL Infra, Nagarjuna Construction, Ramkey Infra though it is not in the F&O segment because they have their real estate projects, BOT projects and intention to monetize. But, one cannot be gung-ho on the stocks like GMR Infra and GVK where the presence or investment is more into the airport space which cannot get montised or may be in the power space where the things are under development stage because none of their projects except may be for 1000-1200 megawatt none of them are really available for monetization to reduce the debt.