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Last Updated : Nov 25, 2016 04:33 PM IST | Source: CNBC-TV18

Tulsian's take on NBFCs, aviation, metals & others

The market now looks under-owned says SP Tulsian of in an interview to CNBC-TV18. There will be some profit booking but remain prepared to see a level of 8,500 on the Nifty for the December series, he adds.

The market now looks under-owned says SP Tulsian of in an interview to CNBC-TV18. There will be some profit booking but remain prepared to see a level of 8,500 on the Nifty for the December series, he adds.

He also shared his views on sectors like non-banking finance companies, metals and aviation and specific stocks like Shilpa Medicare

Below is the transcript of SP Tulsian’s interview to Sonia Shenoy and Anuj Singhal on CNBC-TV18.

Anuj: Your big call over the last 3-4 days was that the pain is in the system only till expiry and post expiry we will have a big rally. It is a 400 point rally that we are seeing on the Sensex now. Do you get a sense that things from here will only improve?

A: Yesterday, that was my biggest and I said yesterday that we are seeing the climax of the weakness. And I gave 5-6 reasons but our conversation got interrupted and I could not carry on with our conversation. And I gave all the positive reasons. 5 weak series, all the positive reasons, maybe rate cut, demonetisation, shouting and all that coming on the track, if Fed hike does not come, that will be seen very positive Q3 advanced tax numbers, parliament session getting over. And if you see all these things, the market goes into that tailspin when the Futures and Options (F&O) traders are not able to trade on their own trades. I mean a lot of liquidations. If you check with the broking houses, the risk management system where the most active, and the kind of liquidations which we have seen the F&O positions having done and then the consequential security having provided by them in the form of shares of other companies, that has really played havoc in this last 2-3 days.

And I have always said, and in fact, yesterday also I have repeated that when you see these type of weakness coming in you see the climax or things getting end with the expiry. And if you see, because of that, there was very low rollover on the long side, obviously brokers are not allowed, because even now, many brokers are stuck with the debit balances of the F&O traders and all that. So, obviously, the things are now looking quite, the market has become quite under-owned. I have heard someone saying that this is a short covering. Sometimes, I am unable to understand that why we use the generic word like short-covering on the first day of the F&O series because those who have rolled over, if he has rolled over shorts, that is a conscious move of taking a bearish view on the market and those who have rolled over long, taking a conscious view on the bullish view on the market.

So, my point is that yesterday was a technical positions where the weak hands have all slaughtered and got removed from the market. And that was the reason I have said that yes, things are looking quite robust going forward. And same view I maintain. In fact, let me add one more point of the pre-budget rally which will start kicking in maybe from the middle of December. So honestly, if you ask me, I do not really track these 200-day moving average and the supports and all that, because yesterday, where screamingly it was said on the channel that 7,920 has to be again revisited to have a stable market and all sort of things, but let me tell you, I do not see honestly any reason of the weakness coming in. I am not saying that profit booking will not come. If you see this kind of market moving up, maybe tomorrow or Monday and things, you will see some kind of profit booking but remain prepared to see a level of 8,500 on the Nifty for this December series.

Sonia: Do you track Shilpa Medicare by any chance? It is up 10 percent post its earnings.

A: I have not seen the numbers so difficult for me to comment. Yes, this is seen a high beta stock which has been going up quite swiftly and any positive news is helping in that direction. So, unless and until I see the results, it is difficult to take a call.

Anuj: This non-banking finance company (NBFC) rally, something that you spoke about 3-4 days back, you were very bullish on NBFCs. I am sure you are not surprised by the rally, but from here on, which ones will you back?

A: I am surprised that unfortunately, why the market all the experts were so negative on the NBFC when I have been, sometimes your confidence gets shaken, but that has not happened with me. And yes, coming now specifically on your question. I have been in fact, repeatedly giving one way call on the NBFC for whole of this week and I maintain my positive view. Now if you really take a call, if I want to narrate the NBFCs in the order, my best buy will go with Bajaj Finance because the kind of run-up which you will be seeing swifty, because yesterday also I repeatedly say that look for the NBFCs which have a very strong rural inroad. So if you go on that parameter, you get to see three companies in that space, that is Bajaj Finance, Mahindra & Mahindra Financial Services and Capital First.

Now if you take a call on the other NBFCs like maybe Manappuram Finance or maybe Cholamandalam Investment and Finance Company, in fact they are all looking very good. In fact, I am keeping, maybe Bharat Financial, Ujjivan Financial Services, those you may call it as a microfinance company, I do not honestly, and sometimes on a broad parameter, housing finance companies also in the same category like Indiabulls Housing Finance, LIC Housing Finance, Dewan Housing Finance Corporation in the same category. So broadly quite positive, but since you have asked me a few companies, my three preference goes with Bajaj Finance, Mahindra and Mahindra Finance and Capital First.

Anuj: In metals, clearly we spoke earlier as well. You prefer stocks like MOIL and NMDC and not as much as Hindalco. But for these stocks, would you stay invested? Do you think this metals rally has more legs to go?

A: Yesterday, in the same show at the same time, I have said that I am very bullish on the ferrous metals stocks and those who are supplying the natural resources kind of things so maybe the raw materials. And you are right, let me add 2-3 stocks in that category, one is MOIL, second is NMDC, third is Sandur Manganese and Iron Ores and fourth is Sarda Energy and Minerals because if you really see all four companies, NMDC, pure iron ore supplier, pure manganese ore supplier, Sandur Manganese, again pure manganese and iron ore suppliers and Sarda Energy having captive iron mines and having the procurement of the manganese ore from the Goa mines on a long-term contract basis. And the kind of run-up which we are seeing in the prices of manganese ore and iron ore, in fact, I am waiting for NMDC to raise the prices, maybe in the first week of December, we will get to know. Similar will be the case with MOIL. I will not be surprised to see both of them increasing the prices by about 10 percent.

Iron ore prices have risen almost 80 percent in this calendar year, more than 80 percent. Same thing is the case with Manganese ore. Now manganese ore and NMDC, both have seen the reduction in the paid up equity also after post buy-back. Cash rich company, NMDC having cash of Rs 32 per share. MOIL has a cash of about Rs 50-60 per share. NMDC giving a dividend of maybe 1,000 percent and maybe that same process continues. Sandur Manganese again there are corporate news. So, my point is that I continue to have a positive bias on all these stocks and more especially apart from these natural resources, the companies those who are engaged in manufacturing ferro alloys as a forward integration route in which Sarda Energy falls in that category.

Sonia: Aviation is a space that you track closely. The stock now has given up whatever little gains it had and is now in the red. How would you read into this number? Income growth of about 35 percent year-on-year and profits, year-on-year have doubled, but quarter-on-quarter have fallen quite a bit.

A: It is wrong to take a quarter-on-quarter number for the aviation stocks, because definitely this was the lean period, Q2 is always the lean period, but if you see this price, the kind of operating performance, the improvement, I am highly impressed and I have repeatedly said that maybe about six months back Jet Airways used to be my top priority, but SpiceJet is now my top-priority and I continue to have a positive bias particularly on the stock. Maybe mild positive on the sector or maybe neutral on the sector, but looking to the operating efficiencies, the operating leverages being enjoyed by the company on all parameters, I will not be too disturbed on maybe some of the things like plant load factor or something like that. But overall the things are looking quite good and I am keeping a positive bias, unless and until there is a sudden jump in the crude prices beyond USD 55-58 per barrel and that could be a spoilt sport, but otherwise, I am keeping a positive view on the stock.

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First Published on Nov 25, 2016 04:33 pm
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