Pharma, IT and FMCG may see profit booking today: Tulsian

In an interview to CNBC-TV18 SP Tulsian of sptulsian.com said, he doesn’t expect the government to rollback diesel price hike despite resistance from opposition parties. However, if the hike in price is withdrawn then it will be damaging for Congress and the economy.

Meanwhile, he expects funds to flow from pharmaceutical, IT and FMCG to banking and metal stocks today. He expects Nifty to touch 5,600 in the September series. Below is the edited transcript of Tulsian’s interview with CNBC-TV18. Q: Politically do you think they will be able to push through this Rs 5 hike and do you think it will stick? A: If they are not able to push through then it will be a big defeat for the Congress government. Day before Samajwadi Party started expressing their anguish on some of the issues and same is with Mamata. For them there are noises from both these sides. I do not think that any kind of rollback or withdrawal is going to happen and if that happens, it will be more damaging. In that case, it would have been better they would not have proposed it all. Q: In all this noise what might have been left out is that Essar Oil has got a staggered payment plan option from the Supreme Court over eight installments. Do you see the stock opening very strong? A: The stock has been strong; if this news flow was to be taken then the stock should have corrected to sub Rs 40 levels. There is such a strong trading grip in the stock; it has always withheld all adverse news. The stock is likely to trade positively. I do not see why the stock cannot move to Rs 53-54 level in the next couple of days. Q: There is an expectation that today FDI in aviation may get cleared, but we have also heard many of these foreign companies like Emirate and British Airways saying that they are not interested at this point. Do you see any progress for any of these companies either Jet Airways or SpiceJet? A: I do not think any foreign carriers will say that they are waiting for these clearances to happen and they are keen to acquire the stake. Everyone is interested. They all know companies like SpiceJet and Kingfisher Airlines are available, so they will hold their cards to their chest. So, that is their case in point which they present. If the FDI comes in it will be very positive. The highest beneficiary will be SpiceJet because it has good balance sheets and the management can induct a foreign carrier into the company. As far as Kingfisher Airlines is concerned, we will have to see the progress happening on the debt redemption side. Unless that happens, one cannot solely bank on FDI. Jet will also benefit. Overall it is positive. Q: What is your outlook? How much of a rally are you expecting for the rest of the September series? A: For the day I am expecting pharmaceutical, IT and FMCG to see profit booking because money will get shifted from those sectors to the banking and metal, so some pull down will be done by three sectors. I have been maintaining my view of 5,600 on Nifty and 10,600 on Bank Nifty and for the time being I am sticking to it. Q: A word on the other thing that will happen today that is some news on the five divestment candidates, do you expect any excitement in those stocks? A: None. I do not think that except for NMDC I am excited on any of the stocks because mandatory deal is divestment in Hindustan Copper and MMTC are seem to be grossly overvalued. I am maintaining my view that MMTC has 20% of its current price as the real value. Even in case of Hindustan Copper there is an inflationary element of about 25-30%. It will be interesting to see these two divestments, but otherwise I have no excitement.