Here are some fundamental trading ideas from SP Tulsian

In an interview to CNBC-TV18's Latha Venkatesh, Anuj Singhal, and Sonia Shenoy, SP Tulsian of sptulsian.com shared his readings and outlook on market, and specific stocks and sectors.

Below is the verbatim transcript of the interview.

Sonia: Rakesh Arora was mentioning that the best for the steel industry is behind us and all of the good news is pretty much back dated. Tata Steel has rallied significantly over the past one year or so, do you think that there is more to go or is it done now?

A: If I need to take a call on the Indian context, maybe Rakesh referred this in context with Tata Steel which has more than 50 percent presence in global scenario that is more in the South East Asia and Europe where the situation is still looking dillydallying and it all depends on China. However, if I take a call on the Indian atmosphere which I have been in fact giving my view for last three months, I am extremely positive on the steel sector for the simple reason that the China dumping has totally stopped, China is on the cutting spree for the capacity, the induction furnace kind of things are all getting phased out.

If you see the kind of revival of interest because of the extremely increased margin, the EBITDA margin which we have seen for Tata Steel, Rs 13,000 per tonne, only for Indian operations I am referring, because for Europe the EBITDA margin has been sub Rs 7,000 per tonne. So, if you take the situation going forward for the steel sector and when you talk to the people, I am extremely positive on the Indian steel stocks.

Taking cue from the Tata Steel numbers, again purely on the standalone numbers which represents the Indian operations, Kalinganagar, the capacity of 3 million tonne which they have created, is also playing a positive role. I am getting a lot many ideas taking this cue from the Tata Steel results and many of the ideas or the stocks which I am really positive on, on which we have given recommendations also, I will be closely watching JSW Steel numbers because obviously the increase in their EBITDA margin will also be seen along with the increase in their quantity because they have now reached to the capacity of 18 million tonne.

If I need to identify some of the stocks in the similar space, or maybe at the smaller level, maybe I will go with the stocks like Surya Roshni, Prakash Industries, Sarda Energy, Godawari Power, these are the stocks which are really doing very well. Many of them are seen to have integrated operations, if I say like the case of Sarda Energy or Prakash Industries where they have the coal supply, where they have the iron ore all having got from their respective government.

So, I am keeping very positive view and that is the reason in fact I have been giving the buy call on Bhushan Steel and Monnet Ispat also for the reasons of the NPA resolutions and the interest which has been shown by the potential acquirer in this company. So, I continue to have my positive view on the Indian steel makers and at least I don’t see any reason for that bullishness to get derailed at least for next 12 months or so.

Anuj: The other space to focus on has been the PSU banks. You have been positive on most of them. Now having seen the numbers of Punjab National Bank (PNB) and Andhra Bank, most of the numbers are out now, we are still awaiting the big ones of course, but what would be your pecking order in the PSU banks now?

A: Coming on these two numbers, Andhra Bank has definitely disappointed, but if I go on the PNB, there may be various parameters of analysing each results. Suppose if you look from the slippages probably you may find discomfort, if you look from the reduction or improvement in the asset quality, you may find the comfort. However, overall going forward I have been satisfied with the numbers having posted by many of these banks more specially like PNB, Canara Bank, or even with the results like Oriental Bank of Commerce (OBC) where the things have looked very negative because of the huge losses having posted by the bank because of the higher provisioning.

However, I am keeping the positive stance on the PSU banks for the simple reason that as we have discussed that NPA resolution seen concentrated in 20-30 accounts and largely this 14-15 banks have exposure practically in all the accounts where the exposure is to the extent of Rs 10,000 crore or more. So, going in the same order, now we are awaiting for the results, in fact three big banks are yet to declare their numbers i.e. State Bank of India (SBI), Bank of Baroda (BoB) and Bank of India (BoI) and I am keeping positive stance on all three ahead of the Q4 numbers due to be seen from these three banks.

However, having declared the numbers by the PSU banks, I will be taking positive call in the pecking order of PNB, Canara Bank, OBC, and then Union Bank. These are the four banks on which I am keeping my positive stance.

For full interview,watch accompanying videos...