Govt's move to raise LPG cylinder limit practical: Tulsian

SP Tulsian of sptulsian.com, says that the limit of nine cylinders from six cylinders is extended in Delhi, the same is likely to get extended in other part of the country as well. He thinks that the government has taken a practical stand in increasing the limit.

Below is the edited transcript of his interview to CNBC-TV18.

Q: LPG cap for the poor has now been raised from six to nine in Delhi. What is your view and will this extend to other states and where would the fiscal burden lay, would it be this state which takes the burden?

A: As the limit of hiking cylinders to nine is extended in Delhi, the same is likely to get extended in other part of the country as well. In case of LPG, the government took a stand that 44% of the LPG consumers consume less than six cylinders in a year and there was a big ambiguity. Some said that if this cap is raised to nine then 75%-80% of the LPG consumers would not have come or would have got covered under this they would not have to go for buying any of the LPG cylinders. I don’t think analyst or even economist will take any negativity from this news and it should not be seen as a rollback. Even by increasing this limit it will not have any big significant negative impact on OMCs. I think the government has taken a practical stand of increasing the limit to nine cylinders.

Q: Do you think Pantaloon will move above Rs 190-200 level?

A: Profit booking is advised to traders at Rs 200, but investors can keep a longer term view. The stock can move to Rs 240 in next couple of months on back of news flow with regards to induction of foreign partner and other news.

Q: What is your call on SpiceJet after 13% upmove and the kind of out performance we have seen the entire year as well?

A: I am bullish on Kingfisher and SpiceJet. Once Vijay Mallya clears the balance sheet which he is in the process of doing it, then there will be interest from foreign investors to invest in the airline. Considering the brand recall value, it will be easy for Kingfisher to increase it market share from current 4%. I expect SpiceJet to move to Rs 45-46 in next 10 days.

Q: What is your view on Tata Motors and how much higher can this stock move?

A: One needs a trigger to book profits in this stock. Earlier, I advised investors to book profit at Rs 275 as value was not seen at Rs 280. A sequential drop of 20% in JLR numbers have disappointed. This stock has the tendency to move swiftly in both directions, at times it corrects too much and on the other hand it bounces back to a strong level which we have already seen in the past. In the near term this stock can correct to Rs 260.

Q: What is your view on how the rest of the series may shape up because most of the market participants believe despite the reforms coming through at 5600 on the Nifty they would be quite cautious?

A: Sometime back on the Nifty I was looking at 5650 level and 11,000 on the Bank Nifty and both the levels has been achieved. Still considering the short covering or the renewed interest which is happening in PSU banking stocks or in stocks like Reliance Infra or the counter balancing which is happening due to profit booking seen in IT, FMCG and pharma space. The same trend is likely to continue for the next couple of days.

Which means may not allow this Sensex to move up much. If I revise than I will be a bit cautious on the Bank Nifty from hereon I will keep my stiff resistance at 11,200 and for Nifty I will keep the level of 5720-5725 because then you will see the stocks moving up but the indices will keep, maybe the counter balancing each other maybe because of the drag or fall in the FMCG and IT and pharma index which will be largely offset by the rise in the Bank Nifty.

Q: The government is trying to push up investment in infrastructure as well. What is your call on infra stock, Nagarjuna Construction is up 22% today, GVK is rallied about 15%? Is the risk reward in favour now?

A: I think infrastructure is the nest sector to get sops from government but I am not positive that government will be looking to make investments as the projects which are put up by existing infrastructure companies for sale, there is not much appetite. If PE investors or stable existing company once starts the process then it will be taken as a better indication for the infra space. Some concrete transactions needs to happen which will be seen positive for the sector. A positive view can be taken on infrastructure to see it move positively in next 15-30 days.

Q: What is your target on Kingfisher?

A: I expect the events of debt repayment will start very quickly by month end and if that happen the next topic which will be discussed amongst the investors is the induction of the foreign carriers and normalizations of the operations. The stock can move to Rs 19-20 in next couple of months.

Q: What is your call on divestment stocks like Oil India and do you fear that this time around there might be an execution risk in divestment as we saw in the last fiscal?

A: I have a cautious view on Hindustan Copper and MMTC. There is not much respite in case of Oil India and ONGC as they move in tandem with the oil marketing companies on Hindustan Copper and MMTC so it is difficult to take a singular call. Nalco is the only respectable stock. I won’t be too comfortable to take a long position or a long call.