In an interview to CNBC-TV18's Surabhi Upadhyay and Sonia Shenoy, SP Tulsian of sptulsian.com spoke about his readings and outlook on the fundamentals of the market and specific stocks.
Below is the verbatim transcript of the interview
Surabhi: Overall thoughts, earnings, Infosys and our technical experts mentioned Reliance. That perhaps is a bit of a worry point for the short-term traders because it has been three down days for that stocks, overall geopolitics. How do you read today's session?
A: Either you take a negative call on all these events or you take a positive call. If I come quickly, to start with IT, we all know that things are looking quite murky for the IT companies maybe in terms of Q4 numbers or maybe in terms of the guidance. So, Q4 numbers will not be too relevant, but if you see the guidance, things will really be disturbing the situation because largely on account of the currency and secondly on the visa issue.
Coming specifically on Reliance Industries, I have always been maintaining that Rs 1,350-1,400 is seen to be a good level on the upside. So, probably you will be seeing the situation, the share trading in this range, maybe with Rs 1,350-1,400 as its resistance. Coming on geopolitical, I do not think that anyone has any control and one can really predict on those accounts.
So, the best course in this market is take a valuation call. Wherever you have comfort, maybe either on the sectors on the stocks because you have umpteen ideas available in that space. So, probably take the call. No point in draining our energy on the negative things. Concentrate on the positive and take a call on those sectors and those stocks.
Sonia: We discussed Adani Power a lot over the last couple of days, but I wanted your thoughts on the other group stocks because the fear is that the group companies' funds would be used or cash would be used to service mainly the debt of Adani Power. Would that be a concern for you as well?
A: One can draw any inference, but if you take the four companies of Adani Group, in fact people have been talking of promoters selling some stake in Adani Ports and Special Economic Zone also to finance the losses of Adani Power. But if you take a situation, Adani Transmission and Adani Enterprises Promoters, both the companies have 75 percent stake. I do not think they will be having any intention to reduce that. On Adani Transmission, I have been keeping the positive view and neutral view on Adani Enterprises.
Coming on Adani Port, if you really see the kind of surge we have seen in the share price in this last couple of months, the situation is bound to see some kind of profit booking coming in and I will not be correlating the performance of Adani Port because they have recently cleared the intercorporate or maybe the group company loans and all that which has vastly rerated the Adani Port shares and I do not think the same kind of mistake is going to be committed by the promoters again by diverting any kind of funds or raising funds in Adani Port and financing that for losses of Adani Power.
Coming on Adani Power, Adani Power is seen to be in a precarious situation. The things on the fundamental basis are not seen good though the promoters are seen raising their stake in the company just to finance the losses. I do not have the exact shareholding pattern, but they have been continuously increasing their stake in Adani Power maybe for the last 2-3 quarters.
But coming specifically on their Mundra projects, situation is really looking grim, but I do not think that maybe some kind of arrangements will be made by the promoters either in the form of raising their loan, raising their stake or bringing in as a quasi-equity, maybe as a promoter's loan. But things are looking quite murky at this stage and I will not be linking, I will not be taking any, I do not think that this kind of fear that the losses of Adani Power will be having a reflection on other companies, I do not buy that argument.
But as such, as I said, I have been keeping positive view only on two companies in the group that is Adani Ports and Adani Transmission. But both shares having seen a good run up in the last couple of months, even there, profit booking has been very much advised or it has become due. So, Adani Power issue should be taken on an independent basis and I do not think there is any justification of correlating or having any kind of apprehension seen of this company getting spread on other companies.
Surabhi: Let me turn your attention to the other pocket of the market which is also very sombre today and that is IT. We briefly spoke about Infosys, but overall speaking, what are you expecting? And this 7-9 percent number from Infosys on constant currency growth for the full-year, do you think the company will be able to deliver on this expectation?
A: 2-3 points. Firstly, I do not think company will be really so much ambitious in giving 6-9 percent constant currency guidance growth, number one. Number two, even if they gave probably market will find out some reason to take a negative view or maybe that guidance will last for maybe a couple of hours because if you see the larger picture, two things, that is one is visa and second is currency.
Both are seen the strong headwinds for all the IT companies and I am talking more of these leading ones, those who have the geographical, across the globe presence, one may find out few ideas which are concentrated in some geography or having a niche kind of product or having the different types of services offered.
But I do not think that market will really be happy. So, in such a scenario, that is what I have said at the start of the show that instead of wasting time on taking negative call whether I should take this renewed buying call on all these stocks. It is better to remain away and look for the other ideas.
Surabhi: Phenomenal moves today on a lot of these jute stocks. Manisha was telling us that they are going to be making policy even tighter and more mandatory to use jute bags. That would be perhaps aiding sentiment. Would you buy anything?
A: After having run so much, in fact, we have given buy call on these jute stocks about three months back when they were moving 20-25 percent lower. So, there is no point in chasing the momentum because even if you see, the packaging where the jute will be prescribed or jute will be stipulated, the margins on the domestic business will not be seen that much. And even the domestic makers are seen more. If you take a call on Cheviot Company kind of stocks, they are making handsome profits on the other jute products which are largely exported.
So, maybe on this theme, I do not see any kind of margin expansion seen happening for these companies and having run so much, I will not advise now buying in these stocks.
Sonia: I wanted your views on the entire real estate sector. We have discussed this umpteen times, but today yet again, you had names like Indiabulls Real Estate, Hubtown, some of the others like DLF that moved as well. Purely if someone wants to trade, for a slightly shorter period, what would top your list now?A: They should look for the Tier-II, Tier-III towns where things are looking more on the sales front. So, one can look for DLF. I agree that Indiabulls Real Estate has moved up today, but Indiabulls Real Estate has been showing a kind of maybe if you see last 2-3 days and in Mumbai the sales are still seen to be quite low. Indiabulls Real Estate is largely in the upper segment. They have developments in central Mumbai. Their other projects in Panvel and all that are not seen so much in the limelight. So, maybe DLF looks better over Indiabulls Real Estate at this stage.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.