Last Updated : Dec 28, 2016 11:26 AM IST | Source: CNBC-TV18

Here are a few stock ideas from SP Tulsian

In an interview to CNBC-TV18, SP Tulsian of shared his readings and outlook on specific stocks and sectors.

In an interview to CNBC-TV18, SP Tulsian of shared his readings and outlook on specific stocks and sectors.

Below is the verbatim transcript of SP Tulsian's interview to Latha Venkatesh & Sonia Shenoy.

Latha: Is there anything you think of going long on ahead of the Budget?

A: A lot of things are expected in the Budget. To start with is saving fund. Yes, the increase on the home loan front, increase in the interest payment of Rs 200,000 and the repayment of Rs 150,000. The flaw lies in Rs 105,000 instalment or the loan repayment in the housing that gets clubbed with 80c -- suppose you are availing Rs 150,000 as repayment of home loan then you cannot invest in the Public Provident Fund (PPF) etc, and this has been a long pending demand by the taxpayers that they are losing this opportunity because nowadays majority of the investors are availing home loan, so they are not able to take any other savings route. So yes, 80c limit has to get increased from Rs 150,000 to Rs 200,000-250,000 and home loan repayment of Rs 150,000, which is now clubbed with 80c, has to get released in a separate section, one. Second, the rejig of the person - because if the government is expecting everyone to be tax compliant, you just cannot expect them to live with Rs 250,000 tax limit. So an increase in the threshold and the rejig of the tax slab as well. Rs 250,000 to Rs 500,000 having 10 percent - a minimum should get raised to Rs 750,000 to Rs 800,000 with the next slab of Rs 800,000-Rs 1500000 then there are many other areas like the allowances part and if you recall in the olden days, the salaried people used to get the standard deduction of about Rs 36,000 - that was withdrawn. So if you want to give benefits and tax compliance habit to the people then some extra deduction should be given to the salaried people as well. So, if you take all this into consideration. If I just try to sum up these things then I should say that each individual must have an extra spending power of anywhere between Rs 40,000-50,000 on an annualised basis because of tax rejig, because of tax savings increase in the slabs etc, and that is a minimum amount I am expecting of Rs 40,000-50,000 on an annual basis in the form of disposable income getting increase in the hands of the tax payers.

Sonia: The other thing I wanted to focus on was also the fillip for sectors such as farm, agri, micro, small and medium enterprises (MSMEs) etc and I know you track a lot of these stocks very closely. Is there anything that you would advice buying into in anticipation of some good news coming in for the agri, for the rural sectors?

A: Definitely the focus will be on agri, rural and infrastructure because if you go by the statement of Prime Minister which he gave on Saturday - because he won't mind playing a gamble to displease 4 percent of the people those who are invested into the stock market or maybe less than that and definitely he is focused and rightly so because if you see the job opportunities which needs to be given - just let me give you a point here, this demonetisation effect, the low replacement of the currency, the cause is the power. The load shedding which all the places are enjoying across India one day in a week, so the hardships are all seen, so, you need lot of upliftment maybe on the infrastructure in terms of the power availability, in terms of the increase in the agricultural productivity.

If you recall from the day one the first Budget the government has been talking of the farm improvement, the productivity improvement, the fertiliser card kind of things and all those things. So, definitely those things will be there but I don't think that unless and until you see the specific provisions in the Budget there is any point in taking the call. I can say that yes, the agro chemical, seed company, fertiliser company, complex fertiliser they all are looking good, maybe tractor companies and all that, but that will be a futile exercise. I won't be just increasing my exposure merely on the expectation without seeing the specific provisions or specific benefits having given in the Budget on any of the stocks.

Sonia: How should one approach Bharat Financial Inclusion now? Do you think the worst is over for the stock?

A: I had said earlier also that I see extreme upmove in the stock for the simple reason that yesterday the delivery volume have shrunk, so that indicates that the foreign institutional investors (FIIs) have stopped selling, which we have been seeing in the last  three or four days, one. Second, Morgan Stanley have increased their stake the company by more than 1 percent to 6.68 percent to 7.86 percent and the foreign holding of 75 percent remains intact because even if some FIIs may have sold the shares, about 35-40 lakh shares in the last one week. So Morgan Stanley having picked up 15 lakh shares maybe have got balanced, so the foreign ownership in the company remains closer to anywhere between 72-75 percent. So that is very positive. Third, if you see the management commentary having come on the channel, they have said that Maharashtra and Uttar Pradesh issues are only in some pockets of both the states and across the board. However, the lowest interest rate of 19.5 percent micro finance company, regulated by Reserve Bank of India (RBI), I am not too worried on this. So I won't be surprise to see the stock swiftly moving to a level of Rs 600-650 in the next couple of weeks to one month as well.

Latha: Your old hunting ground of chemicals stocks and sugar stocks. Some of the themes may have played out but you are also getting many of these stocks at bargain levels now. Is there anything we should keep on the radar?

A: I think Uttar Pradesh (UP) based sugar mills are still available at a bargain level because just to summarise, I have said earlier also that FY17 will be the record performance to be posted by these companies. I am not including across the board because Bajaj Hindusthan has to get excluded but if I need to add this thing and take the case of Dwarikesh Sugar Industries, Dalmia Bharat Sugar and Industries, Balrampur Chini Mills, Triveni Engineering and Industries, Oudh Sugar Mills, Upper Ganges Sugar, all UP based sugar mills will be showing the record performance of FY17 which we have not seen in the history of the company - that is precisely on UP because for the simple reason that Indian Sugar Mills' Association (ISMA) has been saying that the production will be 23 million tonne but I do not think that the production is going to exceed 21-21.5 million tonne in this season and in the last one week we have seen the sugar prices having hardened by about Rs 150 to Rs 200 per bag in UP and the advantage now with UP is that Maharashtra have stopped crushing, many of the mills have stopped crushing, which we have seen first time in the history where mills have run less than 45-60 days. So Maharashtra and Karnataka is going to witness a drop of about 35 percent in the production as against over the previous year. So I think that the rally in the sugar has not understood and this has just started, so keeping a positive view on that.

However, since you have touched on the chemical space, the caustic soda and soda ash on which I have been keeping a positive view on many of the specialised chemicals like vinyl sulphone, maleic anhydride, phthalic anhydride but I would add that caustic soda and soda ash also are also facing short supply and the prices have started hardening. Therefore, I do not think the supply can get resumed or normalised in the six months or so. So yes, I am keeping positive view on those stocks as well.

Sonia: Two heavyweight stocks have bucked the falling trend in the market lately. One of them is Reliance Industries which has gone up almost about 8 percent in the month of December and Infosys, both the stocks are even higher in today's trade. Would you put any fresh money to work in either of these names now?

A: I won't be because both should be taken as a technical trade because when the market was down both were just giving the support. So maybe if the market corrects, you can add HDFC also in the same category but I do not think that they can reward the shareholders. If you want to make money, as I just said on Bharat Financial, the story can be in Satin Creditcare Network also, where we have seen qualified institutional placement (QIP) happened at Rs 550 and the stock is ruling at Rs 330. However, this is not a heavyweight; I am just giving an example. So I won't be going into the stocks which are more seen as a tactical trade where the firmness has been seen in the carnage of last 45 days or so.

First Published on Dec 28, 2016 10:00 am
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