Tulsian on stocks to watch as market corrects

In an interview to CNBC-TV18, SP Tulsian of sptulsian.com shares his take on stocks that can be invested into after the market correction today.He also shared insights on Dish TV stock and sugar stocks after the Cabinet approved revision of ethanol pricing for supply to oil marketing companies under the Ethanol Blended Petrol (EBP) programme. Below is the transcript of SP Tulsian’s interview to Anuj Singhal and Sonia Shenoy on CNBC-TV18.Anuj: In this correction, what would be the top two or three stocks that you would want to buy, that you would tell our viewers that should be part of your portfolio and this would be a good correction or a good buying opportunity?A: First, if you go into the background of the correction today, the Bank Nifty is seen as the worst affected, fall of more than 500 points and if you see the trend of the Bank Nifty since this weekly option has been introduced which is expiring every Thursday, we see this huge volatilities getting created and that is very dangerous for the traders because it is very difficult to take a call on which way this Bank Nifty is going to trade on Thursday. So, I will not be surprised to see the Bank Nifty again seeing buying coming in from 3:15 p.m. onwards and with that thing in the mind because if you recall at the start of the series I said that first two weeks are seen to be quite cautious and those two weeks are expiring today. The start of the October series has seen two weeks getting expired today. So, I may be keeping a positive bias on the market from Monday onwards because when you talk to the traders and all that or two three brokerages I have talked to and they say that they are all busy in liquidating the future and options (F&O) positions of their traders because as a risk management mechanism from their side. So, if Bank Nifty and bank stocks are seen getting corrected, if you are an indices trader, then I will not hesitate in advising to go for a buy call on Bank Nifty, maybe at a level of about 19,000 which I am again referring 19,000 as a Bank Nifty Future Expiry of October 27. Or one can look to buy selectively into PSU banks, that is one Punjab National Bank (PNB) and second State Bank of India (SBI). Again, as a positional trader, because maybe come next Thursday, you are going to see weekly option expiry again coming on a better note, because you will not see 2-3 consecutive bearish weekly option expiry likely to happen for the bank stocks, so I will not be hesitant in buying these two or three bank stocks. One, maybe as a Bank Nifty below 19,000, Bank Nifty future of October 27 or going long on SBI and PNB at the current level or maybe at about 3:15-3:20 pm.Anuj: Dish TV has corrected 6 percent today. Your thoughts on this stock?A: Actually, this stock is not coming out of the resistance of Rs 100 and seen moving in the range of Rs 90 to Rs 100. I am not keeping a negative stance, so maybe looking to the trading behaviour, one can always look to enter at Rs 90 and look to exit at a level of Rs 98-99. And I hope that maybe till we see the Q2 numbers, which I am not expecting bad numbers as well, then if it is able to breach past Rs 100, then we have to take a renewed call, but till then, I will keep a trading range view on the stock between Rs 90 and Rs 100.Anuj: I wanted your thoughts on the sugar stocks. Today, of course they are down because of that ethanol pricing news. But, do you get a sense that the rally is over? Of course, you had recommended these stocks when they were one tenth of what they are, but from here on, what next?A: If you recall, I have been advising profit booking post the Q1 numbers which we have seen from all these companies mainly the UP based. Now, coming specifically on the ethanol news, if you see the Rs 39 the price which has been announced by the government, naturally plus taxes, that is value added tax (VAT), goods and services tax (GST) or whatever it is, even that optically gives them Rs 3 or Rs 2.50 over what was the earlier rate. Earlier rate was an all-inclusive rate, now this time, they have given Rs 39 plus-plus.But if you see the situation going forward, I do not think that the production for the season which will be starting next month, India will be having a production of more than 215 lakh tonne or 21.5 million tonne. So, in that scenario you will not even be having 5 percent for blending ethanol. So, this remains just on the paper, just academical, in India mills, they do not migrate from making sugar to ethanol which we see happening in case of Brazil. Here it is always beneficial for mills to make sugar instead of ethanol. We are still making ethanol only from the molasses which is a by-product. We do not make ethanol from the main product, that is sugarcane. So, going by this all announcement, this is just merely on a paper that has optically spoiled the sentiments. And I do not think that Q2 numbers will really be cheering the market because mind it in Q2, you have the off-season expenses also getting debited to the profit and loss account which will bring down the inventory gain to be made by these UP based companies. I am only referring the UP based companies. They are an exception, maybe Triveni Engineering and Industries, Hindusthan who capitalises the off-market expenses and that gets charged in Q4. So, if you exclude those companies, all other companies are going to post the dull results because the inventory gain which we have seen in case of these mills in Q1 are not going to be quite high in Q2 because of the off-season expenses also getting debited. So if you take a overall scenario, ethanol news having announced is not seen a negative, it is just an academic or remains on the paper, but if you go by the fundamentals, till you see the sugarcane prices getting announced by the UP mill, I will not be taking a call and definitely, ahead of the Q2 numbers, I will remain cautious on all the sugar stocks.