Here is why SP Tulsian feels ICICI Bank is for brave traders

In an interview with CNBC-TV18, SP Tulsian of sptulsian.com, discusses why he is negative on IT stocks. He also says why ICICI Bank is for the brave traders. He also advices on telecom stocks.Below is the verbatim transcript of S P Tulsian's interview to Sonia Shenoy & Anuj Singhal on CNBC-TV18. Anuj: Stock of the day Idea Cellular, sector of the day - telecom, your thoughts on how to approach the big stocks now, Idea Cellular, Bharti Airtel, even Bharti Infratel and maybe Reliance Communication? A: Those who have invested in the telecom stocks I will advise them to use this opportunity to exit. For the simple reason if you take the Idea-Vodafone which is a theme for the day you have seen Idea market cap moving past maybe USD 5 billion or maybe 5.3 billion if I take the prices now. Now if you see the volume, on a very small volume, I am using this word on a small volume 13-14 crore shares with Rs 360 crore as their issued shares and 12-13 crore shares having traded which are largely seen as a short covering because the result was delayed by the company which was earlier scheduled for January 23rd, we are seeing more of the short covering now seen in the Idea – number one. Number two if you see the Vodafone which I have been looking for a valuation of USD 11 billion and if you add USD 5-5.50 billion expected market cap of Idea and if you take that as the base valuation for combining with Vodafone going forward I don’t think that the worth of the merged entity is seen at USD 16-17 billion when you take USD 21 million or maybe sub 21 million for Bharti Airtel in spite of taking that debt and all that I am just referring purely the market cap. So, going forward and number three - I don’t think that the existing players have in their control if Reliance Jio continues with the aggressive pricing plans which as of now they are looking in a mood to because the free offer is valid till March 31st. Let us not forget that this is not an end of the story that from April 1st things will not be again seen getting very aggressive from the Reliance Jio end. That will again be the problematic things start happening from Bharti Airtel. Lastly, we have seen the effect of quarter three results in Bharti Airtel. I won’t be surprised to see the negative, the losses or bottom-line coming in red for Idea for quarter three in spite of all this merger. There are so many if and but between the mergers also how much spectrum has to get surrender, what timeline will be seen and then thereafter what kind of valuations people are looking to whether the tower business which are held by both the companies though Vodafone has clarified that the 42 percent stake which they have in the tower business is not getting included. So, all those things I don’t think will justify. This is just a frenzy, more of the what you call strong hands because if you see the institutional holding or may be the foreign ownership in the Idea is at about 55 percent they will not be wanting to get their valuation destroyed and probably they will equally keen that this merger should happen with Vodafone to salvage or to protect the value of their investments in the company. So, taking all this I am keeping my neutral view on the telecom stocks and advise to use this opportunity as an exit. Anuj: Would you want to bet on any of these three names - ICICI Bank, Bajaj Auto or ONGC? A: Probably, if I am a brave trader then I will go with ICICI Bank. I am not expecting much disappointment after the results. Generally, we have seen that in ICICI Bank there is very strong intuitional interest and yesterday we have seen huge quantity having bought in the stock. So, though I generally advise that you remain away ahead of the numbers and all that but I won’t be hesitate in taking a buy call on ICICI Bank amongst all three. Anuj: Your thoughts on Tech Mahindra, any preliminary thoughts? A: I have not analysed the numbers, but as such I have been keeping the negative stance on all the IT stocks and largely the bigger one, mainly from the US point of view. There is no point in taking the historical calls on the quarter three numbers because there are so many data points which needs to be understood. Firstly, on the guidance and thereafter the US attitude going forward. However, as of now if you take a call or take the situation I don’t think that there is any point in taking a call on IT and pharma both.