Tulsian tells: Stock picks of the day by the expert

In an interview with CNBC-TV18, market expert SP Tulsian gave his views on Biocon, Asian Paints and various sugar stocks.Below is the verbatim transcript of SP Tulsian's interview with Anuj Singhal and Sonia Shenoy on CNBC-TV18. Sonia: So many midcap stocks hitting new highs today, but the stock I wanted to discuss with you is Biocon. It’s suddenly just broken out Rs 756 on Biocon, a fresh high there. How are you position on this name? A: It has been forming everyday probably for the last couple of months it has been hitting new highs and honestly I am not convinced with this kind of valuations though it was lying subdued maybe for last couple of years, so sometime you see the bunched up move also coming in this kind of stocks. I am not doubting about the fundamentals of the company, but the kind of run up which we have seen in the stock price maybe about more than 50 percent in this last maybe about six months or so, so you need to have some kind of caution, because maybe the trading momentum also comes into the play where you may see profit booking coming in. So, I will be having my cautious view on the stock at the current level. Sonia: The space to be in this afternoon once again is sugar, so all your names Bannari, Dhampur, Andhra, Shree Renuka, Bajaj Hindusthan all up 10-15 percent today. If someone has missed out on the sugar rally completely up until now and wants to take a fresh call on sugar, what would your view be? A: Those who are taking a call on the sugar stocks need to have conviction that the things are going to be very good for the next season as well, because I have been calculating the production of the next season that is the season which will start on October 1 and I was stunned to take up estimated production of less than 200,000 lakh tonne. If you recall Narendra Murkumbi when came on the channel about a week back, he said that the production is estimated at 230,000 lakh tonne, but obviously these kind of figures are not going to be discussed and spoken by the trade body that is ISMA or maybe the sugar mills or maybe the government. So situation is going to be seen quite precarious. Now in the current situation the drop in the production will be seen in the Maharashtra and Karnataka and if you see the status quo production in the Andhra and Tamil Nadu, so in this scenario if you really want to take a call then if you take a call today practically today about 25 stocks are hitting upper circuit. You have seen Dalmia Bharat Sugar just hitting 20 percent circuit maybe 10 minutes back. Since morning we have been seeing Oudh Sugar, Upper Ganges, Ugar Sugar and so many other stocks, Dhampur Sugar they are all hitting upper circuit and if you see the theme has been the UP based sugar mills which have been holding the inventory where the unrealised gain is anywhere between Rs 100-400 crore depends on the quantity held by them, the results of Q1 that is June quarter and September quarter are going to be bumper because of the unrealised gain, which will be get booked in this two quarters. So keep a faith for these two quarters profits to come from the inventory held by these mills, especially, the UP based sugar mill and then thereafter the more positive outlook on the sugar season which will start in the month of October. So if you go by this thesis or if you take a call on this basis then probably at least in today’s market you only get two stocks that is Balrampur Chini and Triveni Engineering, both are up by about 8-9 percent, but at least both are quality stocks where the sugars are held to the extent of about 60 lakh bag by Balrampur and 40 lakh bag by Triveni Engineering. So at least you have comfort that production is going to be maintained for next season and margins is going to be seen quite good even for the next season as well, so in the current situation I won’t be jumping for, because there is a lot of left out feeling among the people and that’s why they are running for any kind of sugar stocks without taking a fundamental call on those stocks, but in the current situation because other stocks have already frozen on the upper circuit, I will advise you to buy into these two stocks that is Balrampur Chini and Triveni Engineering. Anuj: You had recommended some profit booking in Asian Paints once it crossed Rs 1,020-1,030 and you said it would be good to wait for some correction before re-entering. It’s now corrected about 6 percent good time to enter or would you wait for some more correction. A: In fact, I gave the profit booking along with the Q1 numbers and what I am expecting that Q1 numbers are going to be disappointing and at that time you may further see the stock correcting, but I am not saying that from here on it will not rise, so even for the investors those who have gone for the profit booking I will advise that yes if they have a long term perspective to hold this stock then they can re-enter, otherwise wait for the Q1 results to come.