Keep a bearish view on PSU banks till F&O expiry: SP Tulsian

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com says he remains bearish on public sector banks till F&O expiry. He also explains why he is bullish on sugar stocks and shares his views on cement stocks.Below is the verbatim transcript of SP Tulsian’s interview to Anuj Singhal and Sonia Shenoy on CNBC-TV18. Anuj: Your thoughts on India Cements today. It is now down nine percent. Clearly this market is now selling off some of the erstwhile outperformers. A: That is right and in fact if you see the performance or Q2 numbers of India Cements definitely as a fundamental analyst you won't be accepting these kind of fall because I don't think there has been any kind of complaints seen in the Q2 numbers and going forward though people have been taking cautious view or maybe negative view on cement stocks but that has turned positive to an extent on Friday. So, I am honestly unable to take the call why the stock has corrected so much. Sonia: What are you recommending to your clients now? Is this time to be still looking at your stocks or do you think that one should just stay away for a bit, watch how this entire demonetisation situation plays out and then take a call? A: Those who have invented earlier and has not been able to book profits which we have been repeatedly advising to do on every 10 percent rise as we have done in many of the stocks like chemical, sugar. In the past also I advised to remain invested in those stocks and the new theme or the new ideas which has come on Friday. UP government having announced the SAP at Rs 305 per quintal that is seen quite positive for UP based sugar mills because I had my talk with few of the sugar mills also in this last couple of days. In the weekend also the situation is going to be seen quite grim. There are no issues involved in respect of the payment of the money to the sugar cane growers. Two of the promoters also have come on the channel where they have confirmed that the payments are made by cheque to the farmers and there are seen to be no issue at all. The kind of situation which I am expecting it to re-emerge again for the sugar stocks with production seen to be at 210 lakh tonne for this season which has just started are making the sugar stocks quite attractive. So, again giving a buy call on the UP based sugar mills few of them because this Rs 305 SAP per quintal for sugar cane is seen quite positive for the UP based sugar mills. Anuj: You were never a great fan of the public sector undertaking (PSU) banking story, the fact that there was so much buying taking place in some of these names. Do you see more pain now in the near term for stocks like Punjab National Bank (PNB) and Bank of Baroda (BoB)? A: This pain could last till expiry because if you see the last week there was lot of euphoria, the huge built up of the deposits by the bank at a lower rate at four percent, that was a unanimous call that this will be seen quite positive, the interest reduction rate cut. So, you have a lot of huge long positions have seen having built in the PSU bank and that time also I had cautioned that I won't be taking a positive view because definitely you have only seen flat results in case of PNB, BoB or maybe other banks. So, I think this pain can last up to the expiry because the liquidation if actually the kind of reading which I have been making till Friday I was only worried in the PSU banks where the long positions have not seen go cut. But I was not expecting these kind of things, the massacre which we have seen today maybe in the form of either fresh shorts having being built or the long liquidations. So, yes, the pain in the PSU banks can remain only till expiry because of the long liquidation. We will need to wait for the rollover datas this evening which is very crucial on the first day of the last week of the expiry which we need to study. So, maybe this bearish view on the PSU banks will remain only till expiry but I won't be keeping a bearish view in the next series purely on the technical factors. Anuj: The government will be absorbing entire subsidy on the sale of kerosene and Liquefied Petroleum Gas (LPG). Would this be any material news? A: I don't think you can really load the ONGC when the realisation itself is USD 45 per barrel. In fact ONGC has been screening that things are not remunerative for them. So, in the given situation when the crude is on an average on longer for whole of FY17 will result into a realisation of anywhere between USD 45-50 there is no logic of imposing that burden on ONGC or upstream company.