- Global news flow & cues
- Stocks to watch, trade setup
- F&O strategies
Niraj Shah, Tamanna Inamdar and Samina Nalwala bring all this and more as we head toward the 'India Market Open.'
- Stocks to watch, trade setup
- F&O strategies
Niraj Shah, Tamanna Inamdar and Samina Nalwala bring all this and more as we head toward the 'India Market Open.'
Category
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TVTranscript
00:00:00Hello and welcome. You're watching India Market Open and we've come back to work after what a Thursday afternoon.
00:00:11Yeah, I love the music. Yeah, it goes with the trend, with the feeling.
00:00:15It so does. But what a move yesterday, Samina. It was quite stunning really.
00:00:19You know, I missed you anchoring yesterday because it was a solid day of trading.
00:00:23Yeah, I saw that and it was almost feeling of missing out almost, right?
00:00:27Because the move was stupendous. It came in such a short period of time and rather unexpected.
00:00:33There was no data, no trend indicating of such a big up move in trade.
00:00:38We made a new record high intraday as well. Yeah, except for, I mean, putting two and two together.
00:00:43I don't know if the China mortgage cut news story that came out on Bloomberg really triggered it.
00:00:52It came in a month ago as well, but it came in around 1, 1.30 p.m.
00:00:55So I'm just correlating two and two together and trying to see if that happened.
00:00:58But yeah, be that as it may, great news from that perspective.
00:01:02And some comments that are coming in from the Reserve Bank of India, Samina, today before we get to the global piece,
00:01:07because the RBI governor in that conversation has laid out some pretty interesting statements about growth and the growth possibilities
00:01:14and about a whole host of other things which are also very, very interesting.
00:01:17And a controlled inflation, even though there's a slight update.
00:01:19But I think the other thing that some people have said could have contributed to the up move yesterday
00:01:24was the release of liquidity that was blocked for the Bajaj Housing Finance IPO.
00:01:29So it was about three lakh rupees that came back into the system yesterday.
00:01:33So there was some desk that believed that because of that liquidity,
00:01:37there could be a little bit of aid coming into our markets.
00:01:40But who's to tell? There is no way fighting the trend.
00:01:43There is just one thing that you can very definitely say that it was the FI buying which caused this, right?
00:01:48I mean, even if you discount for the HONASA block of 1700 crores, 7600 crores, this is pure secondary market buying.
00:01:56The FI flows, probably the largest that we've seen in a really long time.
00:02:00And it really helped the market yesterday.
00:02:02I think they're lapping it up before the rate cut.
00:02:04Of course, there are reports that it takes a while for the for a rate cut to impact emerging market flows in a positive way.
00:02:11But talking about rate cuts, it was also the European Central Bank that cut rates.
00:02:16No surprises there. The state was anticipating it.
00:02:190.25% rate cut was given by the ECB.
00:02:22This is the second rate cut that the ECB has conducted this year.
00:02:27They weren't committed about the future course of rate cuts.
00:02:30But nevertheless, European markets look good.
00:02:33That's when the markets opened up in Europe and our markets as well reacted at that similar sort of time when you record highs were made.
00:02:41But a quick check of what's happening all over the world.
00:02:44It's a good looking picture, at least for most markets ex-China and maybe Japan taking some profits off the table.
00:02:51Well, a quick fact that I just discovered, Chinese markets are trading at their lowest level since 2019.
00:02:58Now, that cannot be good news for any of those markets.
00:03:01It made that intraday blip at that level, retested it.
00:03:05And of course, it started moving up just about slightly for those Chinese markets.
00:03:09Apart from that, Japan is seeing some profit taking.
00:03:11Yesterday was a pretty solid day for those markets as well.
00:03:14So, those markets now taking a breather as we see it.
00:03:18All eyes or rather all cues came from Wall Street.
00:03:21It was a firm session, fourth straight days of gains coming in for U.S. equities.
00:03:25The Dow, the Nasdaq and the S&P 500 all eked out very smart gains with the Dow gaining 235 points.
00:03:33Well, there was inflation data coming in from Wall Street as well or the U.S. economy in that sense.
00:03:38Which indicated that the producer price index which is a parameter or a gauge for measuring inflation
00:03:47came in at 0.2% in August versus an expectation of 0.1%, largely in line with what the street was expecting.
00:03:55You also had employment.
00:03:57So, some data coming in on unemployment benefits that have risen 2000 to seasonally adjusted 230,000 for the week ended September 7.
00:04:06Again, in line with expectations, but this comes in for a week when there was a holiday in the U.S.
00:04:12at data point rather volatile, but largely indicating that there is no major hard landing of concerns for the U.S. economy.
00:04:2080% to 90% of the bets still remain on a 25 basis point rate cut and that's going to be largely the only trigger
00:04:27that's going to be driving global equity markets over the next couple of days of trade.
00:04:32Apart from that, gold stocks, I mean, look at those gold miners on Wall Street did really well.
00:04:38Across Australia as well this morning, gold miners are picking up interest.
00:04:41This is because gold prices made a new record high after they spent the last few days consolidating.
00:04:47Well, apart from that, a quick mention on crude.
00:04:50It did record lows early this week, but quite a smart rebound.
00:04:55So, low-level buying was seen.
00:04:57Remember, there were concerns about slowing demand, China cutting back on its demand.
00:05:02More importantly, there was some talk about OPEC and supply.
00:05:06But of course, it seems like output disruption came to the rescue of the bulls for crude.
00:05:13Crude continued to add about 2% in gains overnight.
00:05:16So, that's largely the way we have it.
00:05:18Silver has also been on a good run.
00:05:20Silver and gold usually work in tandem.
00:05:22Silver adding about 2.5% and platinum also closing in with a gain of 2%.
00:05:26So, all in all, it's risk on and I think the markets will continue to be choppy, volatile for the next few days.
00:05:33We go into that rate cut and then it's uncharted territories in some ways.
00:05:39Yeah, maybe global market's choppy.
00:05:40We are not looking at any choppiness.
00:05:42We are not choppy.
00:05:43We've warned Neeraj the last few days, but of course, yesterday's.
00:05:46And I think maybe the ECB could be attributed to it as well, right?
00:05:49Pre-empting the ECB move, yeah.
00:05:50ECB happened, our markets opened up, of course, continued trading.
00:05:54And that big gain really came in the last two hours of trade.
00:05:57Yeah, let's ask Anurag Singh.
00:05:59He is managing partner at Ansid Capital.
00:06:02Joins us right now on the show with his thoughts.
00:06:04Anurag, good having you.
00:06:05Thanks so much for joining in.
00:06:07Good morning from us here to you.
00:06:08This concerted buying in markets across the world yesterday, particularly India, but the rest of the world too,
00:06:17left us thinking about what the possible reasons could be because after a long time,
00:06:22we also saw foreign flows coming into India in a big way.
00:06:25Was it this talk about China looking to cut mortgage rates,
00:06:29or is the market pre-empting a rate easing cycle from global central banks?
00:06:33Yeah, Neeraj, good morning.
00:06:36I think we are talking for the first time on the channel, you know, so good having you.
00:06:42Thanks for having me here.
00:06:44Neeraj, look, I think the runway is pretty clear, right?
00:06:50And, you know, we all, you know, the rates peaked out pretty much last June sometime, right?
00:06:58And after that, the conjecture has been how many rate cuts we'll get in 2024.
00:07:03Eventually, I think we'll get probably three, so 25 basis point in every meeting.
00:07:08And that's a good enough start.
00:07:10I mean, just look at it in this context, that ultimately when they were raising from 0 to 5.5,
00:07:17then we needed a 50 basis point and a 75 basis point.
00:07:20But now once they are kind of going back to something like a 3.5 by 2026,
00:07:27all we have is like eight rate cuts.
00:07:30So my sense is there is no 50.
00:07:33I don't know why the market plugs in 50 sometimes.
00:07:36There's no crisis on that front.
00:07:38But I think that's a good start.
00:07:40And if the rates eventually 10-year yield is already indicating 3.6, 3.7,
00:07:45and market really has eased out a bit in that sense.
00:07:49So I think, yeah, there is no, I mean, the economy is doing solid.
00:07:52The proverbial soft landing has been achieved and Fed has pretty much done the impossible, right?
00:07:58So in that sense, I think U.S. markets look very solid and very robust,
00:08:02at least for the next two, three years.
00:08:04There is no risk to the economy as such.
00:08:06So I think the estimates vary, but, you know, you take an estimate of about $250-$240 for S&P this year.
00:08:14And then, you know, S&P is a fairly valued number at $5,600.
00:08:20Next year estimates are $6,000 to $65,000, right?
00:08:24So that's, sorry, $6,500.
00:08:26So that's where we are, right?
00:08:27I think so there's no kind of concern from the U.S. economy perspective.
00:08:33Let me just quickly touch upon the FII number needed.
00:08:37I really, there's a bit of opaqueness around who actually buys this.
00:08:42But my sense is, you know, that the funds like BlackRock, for example,
00:08:46you know, they saw outflow of about $1.5 billion again in August, right?
00:08:51Because of which, you know, if the ETFs see an outflow, then eventually every emerging market sells.
00:08:56So there is a bit of a, you know, concern still, you know, despite Indian valuations,
00:09:04if the ETFs continue to see outflow, then I think emerging markets will continue to see outflow,
00:09:10regardless of how the Indian market is doing. Neeraj.
00:09:13Anurag, hi, it's also Samina joining in.
00:09:16It's rather interesting how swiftly we go from concerns of a hard landing, worries about a recession, to a healthy economy.
00:09:25I mean, it literally takes 24 to 48 hours for the street to change its mind.
00:09:30We all do agree that equity markets preempt what the economy is going to do.
00:09:34And I think there's no fair way of saying whether the economy in the U.S. is healthy just yet.
00:09:39But what we do know is that if a rate cut does come in, emerging markets become a preferred bet.
00:09:45And we've also seen historically the RBI follows on with the rate cut after the Fed to keep the rate differential in place.
00:09:52In that case, do you prefer equities or debt in India?
00:09:59So, Samina, I would take equities any day in a falling rate environment.
00:10:04Now, I understand usually we recommend a 70-30, you know, 30 being a debt, you know, and 70 being equity.
00:10:11Equities benefit with a rate cut and bonds, of course.
00:10:15I mean, look at the rates in U.S., even in India, for example, you know, their 10-year yield kind of eventually drops to 6%.
00:10:23There is a good return to be had in bonds for the next couple of years, right?
00:10:29U.S., there is a bit more return to be had because, you know, the cut is relatively going to be higher from 5.5 to 3.5.
00:10:37So that's good, but it depends on your style.
00:10:40Ultimately, you know, I don't think in India, no matter how much we talk about it, anybody is going to listen to us.
00:10:45If we tell or recommend investing in bonds, because that's not the environment now, right now in India.
00:10:50In U.S., 70-30 works pretty fine. If not 60-40, 70-30 works very well.
00:10:55My style personally and a lot of people, we love it when the rate cut happens.
00:11:00U.S. markets, I think we must, I mean, you would know this as well.
00:11:07So about 35% of the market cap contributed by 6-7 stocks.
00:11:12I think the rest of the market is really at a very mouth-watering valuation.
00:11:16So look at Russell, look at S&P 600.
00:11:20So, I mean, look at financials, healthcare. These are the sectors that do well when the rate cut happens, right?
00:11:25So I think that's a very good position to be in.
00:11:28There's a bit of a broadening of the market that's happening out here in U.S.
00:11:34India has a very different story. So, you know, that'll have to be seen very differently.
00:11:39Quick comment on the RBI piece, Samina.
00:11:42I think, look, so one is this, the CPI in India, the index, I think just a quick thought,
00:11:49and I'm sure the wise people know this better.
00:11:51The CPI needs a bit of a reject.
00:11:53I think the 50% of CPI is food inflation in India.
00:11:57So I don't know whether RBI rate cuts impact or doesn't impact the inflation number as such.
00:12:03So that's a bit of a long-term project that India has on its hands.
00:12:07Other than that, I think, yeah, I mean, RBI can cut, I think across the world, rate cuts are happening.
00:12:13So RBI has got a green signal even from European Central Bank or federal.
00:12:16I mean, they don't need an official green signal, but they were trying not to preempt or prejudge federalism.
00:12:23So at least in that sense, I think next week we'll also have that signal.
00:12:26So yeah, all looks good, except that the two markets are very different.
00:12:31India is on a very different trajectory and US is on a very different path altogether.
00:12:36Samina.
00:12:37Thank you, Anurag. You have a great Friday ahead and a good weekend too.
00:12:41We'll catch you soon.
00:12:43Well, that's what we have in terms of the global setup this morning.
00:12:47The belief is that the US economy is looking healthy and there's no concerns or reasons to worry.
00:12:52Back home, of course, it's risk on trade.
00:12:54Maybe the transitional money that's been released from the Bajaj Finance IPO has been released,
00:13:01and that could be helping Indian equities.
00:13:03But in terms of a quick mention on flows, like Neeraj alluded to,
00:13:08it's been very, very healthy in terms of the buying that we saw yesterday.
00:13:11Foreign investors bought to the tune of 7695 crores,
00:13:15while domestic investors took some profits and money off the table to the tune of 1800 crores.
00:13:22Well, a quick recap of how the street was.
00:13:26You've pretty much understood where the markets were and what they were getting up to with our conversation
00:13:31in the early part of the show.
00:13:33But the markets had a failed day, to say the least.
00:13:36The nifty went home with gains of 1.89%,
00:13:39with most of the heavy lifting being done in the second half of trade,
00:13:43in the last two hours, to be precise.
00:13:45The nifty made a new record high.
00:13:47It didn't sustain at that level, but finally went home to close at 25,388.
00:13:53Well, what you also want to keep in mind, yesterday was a nifty weekly expiry,
00:13:57which probably helped or was a trigger for the bulls to ensure that the close for the week was solid.
00:14:03Apart from that, it was a broad-based rally.
00:14:06Broader markets, though, underperformed the benchmark.
00:14:08It was one of the days when all the nifty 50 stocks went home with big gains.
00:14:13Nifty metals led the market, rising 2.9% on back of higher global commodity prices
00:14:18that we saw across Asia in early trade.
00:14:21PSU banks that have been on the sell side for a number of weeks now also did see some buying.
00:14:26Bajaj Auto was your big gainer in trade, made a new record high gain for the fourth straight day.
00:14:31Bharti, Hindalco, RIL, HDFC, ICSE Bank and even Infosys finally participated in the party.
00:14:38Nifty Bank rose 2.2%.
00:14:40It was about time.
00:14:41It's up 2.2% for the week and it's had its best performance, I believe, since June this year.
00:14:47Zomato, Thermax, MTNL, Kalyan Jewelers were some of the big gainers in the broader market.
00:14:52Granules, of course, had a rough 16% cut in trade and Hunasa came in with supply.
00:14:57Stock, of course, declined, but the supply did get lapped up, Neeraj.
00:15:01Yes, it was very strong.
00:15:04You know stocks like granules have issues when on a day the markets did what they did.
00:15:08It was down about 16% or 16% actually.
00:15:12So we discussed the big move, the ECB move, even though the ECB has said that they are not committing
00:15:19or pre-committing to the future path for rates, but that is that one big thing that has happened in trade.
00:15:26So what does that plus the flows that have come in imply for trade today?
00:15:31Remember, we already mentioned this, but FII has put in nearly 7,600 crores worth of capital to work in trade yesterday.
00:15:38So the FII long short ratio is at 65.52.
00:15:42So even on the derivative side, there's been serious buying that happened in index futures
00:15:49as well as single stock futures from the FII side.
00:15:52So the bent of the global investor seems to be on the long side when it comes to India.
00:15:58In fact, you see banks seeing the first whiff of serious performance.
00:16:04And I would presume that is the FII buying impact that happened in trade yesterday,
00:16:09closing above that 51.500, which has been a key point of resistance
00:16:14with even HDFC Bank participating in addition to ICSE and some of the others.
00:16:18So that was heartening to see really.
00:16:20And let's see if there is follow-up action.
00:16:22I mean, SBI, HDFC, everybody participated, which is actually a great sign.
00:16:27And very likely that if this bout of outperformance is to continue,
00:16:31that large caps will now start outperforming the SMIDs or the small and mid-cap stocks quite convincingly.
00:16:39Because we saw that in trade yesterday that the Nifty was up about 1.7%, 1.8%.
00:16:43But the SMIDs were a tad bit lower. The small cap index was up just about a percent.
00:16:48So we saw a bit of outperformance in trade yesterday.
00:16:50Let's see if that continues.
00:16:53And just a pocket to watch before we get to specific stocks.
00:16:56I mean, just look at jewelry with gold hitting new highs
00:17:00and the kind of enthusiasm around some of those stocks,
00:17:03because it's the start of a long wedding season.
00:17:07And analysts are baking in better demand trends on back of the customs duty cut.
00:17:14So both of those factors leading to some of the analysts really giving it a thumbs up.
00:17:19So Citi, for example, raised Titan's target multiple to 65 versus 55.
00:17:24Kalyan, Samina, we saw what happened in trade yesterday, right?
00:17:27HSBC raised the target price, promoter brought in the latest block deal.
00:17:30That stock was up 5% after rallying so strongly.
00:17:33So somehow this gold price movement and jewelry stock seems to be making this a pocket to watch as well.
00:17:38Yeah. And strong upgrades as well coming from brokerages.
00:17:42Just to add to your list of Kalyan and Titan, PNGuardkill,
00:17:46it's going to be the new boy on the block in a few days from now.
00:17:49It was highly oversubscribed. And remember, it's a significant play in Maharashtra.
00:17:53So it's still a new kid on the block.
00:17:55But the subscription numbers, if there are anything to go by,
00:17:58are out to indicate that anything that is showing potential for growth is getting lapped up.
00:18:03Just talking about a few more counters that we should be tracking in today's day of trade.
00:18:09Stock specific news may be rather limited.
00:18:12A lot of it is brokerage related in that sense in terms of reaction and broader trend related.
00:18:16Neeraj has already highlighted why jewelry stocks we want to watch for.
00:18:20I just throw in oil and gas stocks as well.
00:18:23We've in fact, Neeraj talked about this before we go into specific names, is OMCs.
00:18:28They haven't participated despite the fact that crude was declining and declining very sharply.
00:18:34Of course, there are reports and indications as it could be a fuel price cut coming.
00:18:38And that could explain why any sort of upside was getting sold into an HPCL, BPCL or an IOC.
00:18:44Mika has done a little bit of work on this.
00:18:47So, we'll bring her on to explain to our viewers of what this means for oil companies
00:18:51and of course, what it means for stake and stockholders of these stocks.
00:18:55But apart from that, a few more to watch for in trade.
00:18:58You've got jewelry, you've got oil and gas.
00:19:00There might be paint stocks that may be on the sell side on back of a recovery in crude.
00:19:05And tyre companies as well may not have it great.
00:19:07Implied nifty indicating to a flat to slightly higher start.
00:19:11Power grid, keep an eye on this one.
00:19:13They have won a deal for augmenting of transformation capacity in Gujarat.
00:19:18It's an important one.
00:19:20It's a large deal from what we understand.
00:19:22Over the course of the next couple of hours, we will get an indication of what this means
00:19:27to the financials and the time horizon of this deal for power grid.
00:19:31But significant in that sense.
00:19:33The stock, of course, like every other stock, went home with gains in yesterday's day of trade.
00:19:37Nazara Tech, this could see quite a bit of movement in early trade this morning.
00:19:42They reported to the exchanges that they're looking to invest 982 crores in Moonshine Technology.
00:19:49Moonshine Technology, remember, is the parent company of Poker Bazaar, Poker Bazi.
00:19:56And they will acquire 47.7 percent stake to the secondary market and will inject 150 crores in a primary capital into Moonshine.
00:20:05This is going to be a big acquisition for them.
00:20:09Mostly the stock went home with gains of 5 percent yesterday.
00:20:13Further gains could not be ruled out today.
00:20:15One, the next one is a smaller company, but it's a pretty large order wind, HG Infra.
00:20:20They received an LOA from the Central Railway and awarded a 715 crore order from the Central Railway authorities.
00:20:28And the construction period of this is 30 months, which means the cash flow on this order is also not too long,
00:20:34about two and a half years from what we understand.
00:20:37Neeraj, that's what I have. Three stocks. Hopefully, we will react to some news triggers this morning.
00:20:43Yeah, it could be interesting. So watch out for these, of course, the list that Samina has pointed out.
00:20:50In addition to this, there are, well, like I said, jewelry remains a pocket to focus on.
00:20:56So that's one on my list. Watch out for Titan in particular, because Citi has upgraded the stock, the target multiple to 65 times versus 55.
00:21:05But watch out for Kalyan Jewellers, watch out for PC and some of the others.
00:21:10So that's the first on my list. Panacea Biotech could be interesting because USDFC has committed a 20 million loan,
00:21:1920 million dollar loan, by the way, to the company for expansion purposes.
00:21:23The nature of the entity giving the loan makes it very, very interesting.
00:21:27So that's the second stock on my list. And I'll watch out for the telcos because they were very active in trade yesterday.
00:21:35Bharti Airtel was amongst the top gainers of probably the best performing stock on the index.
00:21:40Bharti Hexacom was up as well. And the notes that have come out this morning from Jeffries is interesting.
00:21:47So Jeffries has reiterated a buy call on Bharti Airtel. The target price has been up to 1970 from 1760.
00:21:56Amongst other things, they believe there are multiple tariff hikes in the offing.
00:22:02So watch out for Airtel in the session today as well. And watch out for Hexacom, which has gotten a Jeffries upgrade to a buy rating.
00:22:10The target price has been up from 1260 to 1600 with the current price being 1291.
00:22:17They say it's the best play for playing tariff hikes. And the target upside at 1600 means that the upside is to the tune of 29 percent.
00:22:28So I'll certainly watch out for this one as well in trade today. So these are amongst the key stocks.
00:22:34Then there is a note from Jeffries on Zomato or Samvardhana Motherson, which has seen a series of downgrades.
00:22:40All of stocks will be in focus. But my top three were these.
00:22:43So when news flow is slow, brokerages come to the rescue of the street in some sense.
00:22:47But another couple that I want to just very swiftly add is BLS International.
00:22:51It's a small company, but they've also gone out and made a significant acquisition where they are going to acquire 100 percent stake in Citizenship Invest,
00:22:58which is a Dubai-based firm specializing in investor programs for the Golden Visa over 15 countries.
00:23:05This acquisition is valued at about 260 crores, will be funded through their internal accruals.
00:23:10So this is one more counter you want to track. Went home with gains of 5 percent yesterday.
00:23:14Maybe the market had a whiff of this deal. Well, just a quick mention on the other one that I think could see a little bit of a reaction in that sense is HCL Tech.
00:23:27The company has announced the acquisition, again, 100 percent stake buy in Zena SAS, which is a software company based in Paris at an enterprise value of 23.9 million euros.
00:23:40Neeraj, also a couple of other stocks that saw big blocks yesterday.
00:23:45HONAS, of course, saw some of its early private equity investors sell sick.
00:23:51So you had your Firesides and Stellaris that took their exits, timed in line with what regulation allows them to do.
00:23:57But enough and more supply that did get snapped up quite well from what I understand.
00:24:02Even though the stock went down this morning, should be seeing some recovery on back of that overhang being behind them.
00:24:09Yeah, let's wait and watch if that were to happen. Speaking of block deals, just lastly, Patanjali might also be a stock in focus today because of the block deal.
00:24:16But as Samina highlighted before, the potential good news for everyone in terms of consumers is that there could be a cut in petrol and diesel retail prices,
00:24:25which have remained unchanged since March 2024 and fixed for the last 28 months.
00:24:30Well, this possibility comes in after the commentary from oil secretary.
00:24:35Mihika, what has the oil secretary said? More importantly, what is the impact on the related stocks?
00:24:43Good morning, Neeraj. So, Pankaj Jain, the oil secretary, has stated at a recent event that fuel companies may consider cutting and reducing retail fuel prices
00:24:51if the global crude or oil prices remain on the lower end for an extended period.
00:24:55He also said that India is also seeking higher OPEC output and maximizing their cost-effective crude purchases from Russia.
00:25:02Now, just context for the viewers, crude prices are down 16 percent since July 2024 itself.
00:25:07They also dropped to a 33-month low earlier this week.
00:25:10Now, lower crude prices are positive for IOCL, BPCL and NHPCL as it helps their marketing margins.
00:25:16Now, the government may cut diesel prices in the range of 2 to 3 rupees per litre.
00:25:20And the reason have been the lower crude prices and OMCs experiencing higher marketing margins because of that.
00:25:26When we talk about when the fuel rate cuts could come in place, well, according to MK, they expect retail prices amid the upcoming state elections,
00:25:33oil prices to be cut only towards Diwali before Maharashtra's election model code of conduct.
00:25:39And when you talk about how the impact on the oil companies are, well, they are seeing strong marketing margins currently.
00:25:45Now, in Q1, the petrol and diesel marketing margins were at 5 and 4 rupees per litre.
00:25:51July and August, we saw an increase of this.
00:25:54And September was when the companies have been experiencing supernormal marketing margins because of the lower oil prices.
00:26:01Petrol marketing margins at 15 rupees per litre, diesel at 13.
00:26:05So, the Q2 expectations are also healthy at 10 rupees per litre for petrol and 8 rupees per litre for diesel.
00:26:13And lastly, I would like to end with, even though Brent prices have recovered from the 33-month low, they are currently trading at $72 per barrel.
00:26:19MK believes that the company could still yield 5 to 7 rupees per litre of margins in Q2 FY25,
00:26:26even if Brent oil prices average at $75 per barrel and even if margins get impacted by the potential price cut due to the fuel rate cuts.
00:26:36Well, let's see. It's a sector that fundamentally should benefit.
00:26:41But the price action, a clear indication that the street is in no mood to give a thumbs up to the oil marketing companies as yet.
00:26:48So, let's see if today is a different day or does it remain the same?
00:26:52Well, a small shift towards the macros because that's important too before we shift back to the micros.
00:26:58Rising vegetable prices continue to drive retail inflation higher.
00:27:02August data shows that CPI inflation has surged to 3.65%.
00:27:06Pallavi Nahata joins in now with the details. Pallavi, what are internals looking like?
00:27:10Right. Inflation for the month of August has come in at 3.65%.
00:27:16That's for the month of August and that's compared to 3.54% that we had seen in July.
00:27:23A Bloomberg poll of economists had pegged inflation to come in at about 3.4% for the month.
00:27:30In July, we'd actually seen inflation fall to a five-year low.
00:27:35And this month in August, despite the uptick, inflation does actually continue to remain under the central bank's target of 4%.
00:27:44Let's have a quick look at some of the key internals.
00:27:47Food and beverage prices saw a 5.3% rise in August.
00:27:51That's compared to inflation at 5.1% that we had seen in July.
00:27:56Vegetable prices also saw an uptick coming in at 10.7% for the month of August.
00:28:04That's compared to 6.8% that we saw in July.
00:28:08Core inflation that excludes the volatile food and fuel components came in at about 3.44%.
00:28:15Not too different from the print we had seen in July of 3.41%.
00:28:20That's according to Bloomberg.
00:28:22But essentially what this means is because this print was impacted by the base effect, inflation is likely to inch up from here on.
00:28:32That's the reason why the RBI or the Monetary Policy Committee might not choose to cut rates when it meets next,
00:28:39despite the fact that inflation is currently below target.
00:28:43Okay, well, so that's inflation inching up to 3.65%.
00:28:47But remember, it's a very fluid situation.
00:28:49Very likely the next month's data could actually look much better on the inflation front as well.
00:28:55Remember, October is something that a lot of people have said is firmly on the table when it comes to RBIs.
00:29:01But I must say, as much as yesterday's move on the markets and fund flows was impressive,
00:29:09I think what remains the most impressive thing in the Indian market is the surge of applications for the primary market paper.
00:29:16Now, one more in the offing.
00:29:18One of India's largest private multimodal real-focused logistic firms, Western Carriers, is coming out on IPO today.
00:29:25Samina, what can you tell us about Western Carriers?
00:29:28Oh, like you said, it's one more in the offing.
00:29:31I think yesterday was an aberration when we didn't have an IPO actually opening on the street.
00:29:35And that could explain why the secondary markets did as well as they did.
00:29:38But this one's an interesting one, not a very large one, an interesting industry, not your typical sort of company in that sense.
00:29:46Quick details on Western Carriers IPO.
00:29:49This IPO opens for retail subscription today, which is 13th of September and closes on the 18th of September.
00:29:57The company is looking to raise Rs. 492 crores.
00:30:01The price band of this issue is in the range of Rs. 163 to Rs. 172 per piece.
00:30:08The anchor book investors managed to do quite well.
00:30:11The anchor book investor has included names such as Kotak, Motilal, Aditya Billa, Sun Life, amongst many others that participated in the offering.
00:30:22Let's remember that this is one of the few IPOs that haven't got too much international subscription in that sense in the anchor book.
00:30:29They did successfully raise Rs. 148 crores from their anchor investors.
00:30:33Now, why is Western Carriers looking to raise funds?
00:30:36The first thing that they're looking to do is remember repay or early repayment rather of the debt that they owe.
00:30:43Capital expenditure may be required as well because they've got very aggressive plans.
00:30:47And one way for them to grow and increase market share is by going out and making acquisitions and growing inorganically.
00:30:54They're also talking about purchasing commercial vehicles, a 40 feet specialized container and a 20 feet normal shipping containers and reed stackers.
00:31:03So that's what the objective of this issue is.
00:31:05Now, let's tell you what Western Carriers does in a nutshell.
00:31:09The company, like Neeraj said, is one of India's largest, private, multimodal, real focus, 4PL, asset light logistics firm.
00:31:18In terms of container volumes handled or operated by Western Carriers, it controls about four to six percent of the market share as of F523.
00:31:28Well, pardon me, two to six percent of the market share.
00:31:32The company also provides chartering services to overseas destinations.
00:31:37They also provide Steve Doring services at the ports and the coastal movement, of course, of cargo across the country.
00:31:46So they do a lot largely in the business of logistics, which is, remember, a rather fragmented one, at least right now.
00:31:53But if India does aim and urge to become a destination in terms of, you know, a hub of the world, logistics will play a very, very significant role.
00:32:04And hence, Western Carriers IPO becomes an interesting one from that point of view.
00:32:09Well, let's tell you what the outlook for the company is.
00:32:12They have seen very aggressive, they've seen decent, rather healthy volume growth in the last financial year.
00:32:18So there's been an uptick. But let's not forget the year before that, they actually lost volumes and saw a decline.
00:32:25So you want to keep that in mind. And the volume growth last year came largely on back of an acquisition that the company made.
00:32:31But they do look to increasing volumes as we go along in the next two to five years by increasing the number of opportunities that they come across.
00:32:39Also favorable government initiatives such as a GSNMP, the National Logistics Policy, the National Rail Plan and the Dedicated Freight Corridor will support the expansion efforts.
00:32:49They have a large number of clients, about 1647 clients is what Western Carrier has.
00:32:56A couple of risks that you want to keep in mind. The company depends.
00:32:59So while they have 1600 odd clients, they depend largely on the top 10 clients.
00:33:04And hence, there is that key consumer or customer risk in their case.
00:33:08They also service an industry which is largely FMCG. So there are any changes in that sector, their financials will be impacted.
00:33:16They don't really have much of an ability to pass on costs.
00:33:19And hence, any sort of disturbance in logistics, input costs, like raw materials, like crude could impact the financials of the company.
00:33:27They also have a significantly high number of working capital requirement days and an inability to meet any of those could reflect badly.
00:33:35What we had noticed in the last year, the financial cost also was quite high, which as expected on back of repayment of the debt that they're planning to do,
00:33:44post raising these funds will have a direct impact on a reduction in financial costs and better operational performances.
00:33:51So all in all, it's an interesting player. It's a rather diversified order of clientele, even though the top 10 clients contribute a big chunk of their top line.
00:34:03The industry as well is full of many small, unorganized players on one hand.
00:34:09On the other hand, they have the big daddies who have economies of scale.
00:34:13This is somewhere placed in the middle, but I guess the promise of growth is what keeps this one going, Neeraj.
00:34:18Well, growth is the panacea for all things, including high valuations, including subscriptions and including stock market performance.
00:34:29It may have been very strong, but if there is growth, stocks are surging, as we've seen yesterday in a clutch of names.
00:34:35I mean, what explains gains technologies, which is trading at 150 times earnings, surging 6% in trade or 10%, excuse me, not just 6%.
00:34:46So growth is the panacea for everything. But Samina, I'm really keen to know what is the F&O data saying about the markets after this ferocious up move yesterday?
00:34:55I think F&O data can take some credit because it did indicate in the early part of this week that there was some hope for banks because that's what we'd seen.
00:35:03When we looked at where all the activity was around the futures and open interest base.
00:35:08But of course, some may argue that that last rally came out of nowhere.
00:35:13Within minutes, the market had made record highs and, of course, eased off from that.
00:35:17But the sentiment was very clearly there to stay as that you saw the nifty weekly expiry yesterday.
00:35:23Well, a quick check on what happened, what led to the gains and how we are setting ourselves up for this morning.
00:35:29This is the first time in about seven, eight days the nifty futures are trading at a discount.
00:35:33While you've seen an increase in open interest of about 10 odd percent.
00:35:36So clearly indicating that the upside now from here is rather limited.
00:35:41The markets will be taking a break. The bulls may not want to take aggressive positions before they go into the weekend.
00:35:46So not surprising that this is how the picture looks in terms of September futures at a discount.
00:35:51And the OI has seen an increase as well. Well, also a similar setup for Bank Nifty.
00:35:57So what you could be arguing is that there could be shots coming up in place.
00:36:01Nifty Bank futures are down, seeing a discount of 13 points at open interest is significantly lower, 12 percent drop in OI.
00:36:11So positions off the table, the outlook for the interim or today at least may not see the bulls trying to achieve new record highs in trade.
00:36:20It could be a day when you would consolidate very likely with a negative bias in the second half of the session.
00:36:26And also just before the weekend, traders don't like to take on very aggressive positions.
00:36:30In terms of the spread of OI, I mean, look at the screen, looks so much more different from it did yesterday.
00:36:3625,500 becomes the most interested level on the call side. This was at 25,000 yesterday.
00:36:45So we've suddenly moved the range in that sense, if I may say.
00:36:49Maximum call OI, so maximum open interest was seen at levels of 25,500, which means that this becomes the next sort of resistance for the street.
00:36:58On the downside, that was this was sitting at 24,800, 24,900.
00:37:04But for now, that is also lifted up by about 100 odd points. And your base for the near term is at 25,000.
00:37:12So the trading range is between 25,000 on the downside and 25,500 on the upside.
00:37:18Looking at the way the calls and puts are spread out.
00:37:21Well, apart from that, you also saw some activity that emerged in 25,600 and 25,400.
00:37:27But the spot of maximum action continues to remain at 25,500 on the upside and 25,000 on the downside.
00:37:35A whole bunch of stocks had a field day in trade.
00:37:38In fact, your nifty 50 counters all went home with gains.
00:37:40And as you can tell, barring granules that had it very rough, you saw short built up.
00:37:45Most of the counters have seen trades on the long side.
00:37:48Page Industries, Canfin, Bajaj Auto, Bharti Airtel, to name a few, saw aggressive long built up.
00:37:55Well, you also had a similar picture for an SPI in Access Apollo Hospitals, RIL, Kotak Mahindra Bank, which saw a decrease in OI and saw short covering in these stocks.
00:38:04So, further upside on these counters is what you could expect as traders covered their shorts in yesterday's up move.
00:38:11So, all in all, good looking market.
00:38:13Some may argue it was short covering led, but that also means that the bets clearly have now moved to the upside with 25,500 becoming an important resistance for the bulls.
00:38:25Well, we have with us Amit Goel of Amit Ventures now joining in.
00:38:28Amit, hi, good morning.
00:38:30What led to that breakout trade in the second half of the session yesterday?
00:38:36Everyone had talked to all through the week.
00:38:38Nobody was anticipating the markets breaking the range so quickly.
00:38:42Right. What does it look like?
00:38:44A new trading range on the cards?
00:38:46Fresh longs can be initiated.
00:38:49Yeah. Hi. Good morning, Sameera.
00:38:50And thank you for having me again.
00:38:52Last we met on Tuesday, the view from our side was that we are constructively bullish and we were looking to build a long position in Bharti Airtel as well as in Bank Nifty, the two trading calls that we had given.
00:39:05I'm happy to report that both of them have worked out in our favor and traders who have taken those positions must have made some money.
00:39:13If you look at Nifty's chart structure and the price action, we have now made a new high.
00:39:19And the structure is firmly indicating that we are now in uncharted territory with a higher high and a higher low sort of formation.
00:39:28Since we are in uncharted territory, it's very difficult to understand where the resistances are.
00:39:34However, the bias continues to remain on the upside and any sort of cooling off or time correction in the underlying, I would look to build fresh long positions for targets of about 25,600-650.
00:39:5025,500 happens to be, as is the want, a resistance for the near term.
00:39:56I do have a trade for Bank Nifty, if you allow me, I'll share that.
00:40:00Yes, please, Amit.
00:40:01And also, I mean, help our viewers understand this, right?
00:40:04We saw a good move on the Nifty financial expiry date this week.
00:40:09Then on Bank Nifty weekly expiry, there was pressure on the index.
00:40:13Yesterday, there was a sharp recovery.
00:40:15But when I look at the F&O picture right now, September futures are at a discount.
00:40:20There's a sharp decline in OI as well.
00:40:23What does that mean?
00:40:25Do you feel like there is long unwinding and from now till maybe in the next few days, you may see some pressure on the upside on Bank Nifty?
00:40:33Absolutely, you're right.
00:40:35This entire rally, if you notice, Bank Nifty has given a couple of shortcoming rallies in this week, which is a little surprising.
00:40:43And that is the reason why the futures are also trading at a slight discount.
00:40:47I do believe since yesterday, the price move was so sharp and furious, the discount has manifested itself.
00:40:54I also believe that, you know, these two prices, the futures and the spot will kind of converge.
00:41:00The question is whether the spot will catch up, whether the spot will come down or whether the futures will catch up.
00:41:06My bias considering the price action and the structure on the charts is that the futures will continue to move up and catch up with the spot.
00:41:14Having said that, I do have a bullish view on Bank Nifty because if you look at the Bank Nifty's price structure,
00:41:21even Bank Nifty has now, with yesterday's furious rally, created a structure which is higher high and higher lows.
00:41:28Technically, it is an uptrending indicator.
00:41:33Given that, and since I do not see any major resistance before 52,500, 52,000, I believe that there is some more room on the upside.
00:41:43Playing for this, I am suggesting that traders can consider building a bull call spread, a limited risk strategy,
00:41:50in which we will buy a 51,600 call of this 18th September expiry and sell one lot of 52,000 call of 18th expiry again.
00:42:02We will keep a target of 3,000 rupees and we will also keep a rupee stop loss of about 3,000 rupees to begin with.
00:42:10I will advise the traders not to rush into this trade because since this is a short covering rally yesterday,
00:42:17we might see some bit of profit booking of early entrants in this rally.
00:42:21So, any dip and reversal or basing could be an opportunity for us to initiate these longs.
00:42:28Amit was largely short covering led and what we could expect today is long unwinding, if at all, in trade.
00:42:35Well, you know, what stood out for me on your call is Jindal Steel.
00:42:39After many days, I am coming across a constructive, bullish call on a metal stock.
00:42:45I know metals gained sharply yesterday, but what's the outlook you are anticipating further upside on Jindal Steel?
00:42:51Yeah, I am purely playing the momentum game here.
00:42:54The structure again in most of the stocks, if you look at the counters, the structure has changed in Jindal Steel also
00:43:01from a lower high to a higher high and a higher low.
00:43:04Along with this, if you notice the option chain, if you look at the buildup,
00:43:08it's clearly pointing towards a long buildup in this counter.
00:43:11It has, of course, fallen and has been depressed.
00:43:14The entire metal stock sector has been depressed for the last couple of months.
00:43:18We are seeing some signs of recovery here.
00:43:20I am trying to play the momentum here in which I am suggesting traders to set up a bull call spread
00:43:26given the buildup in this counter.
00:43:29So what traders could look to do is buy one lot of 1000 call of the 26th September expiry and sell at 1020 call.
00:43:38Even here, I am looking at a target of about 3000 with a rupee stop loss of 3000 again.
00:43:44The structure and the open interest buildup leads me to believe that any minor dip in this counter
00:43:53can be considered as a good entry point for this.
00:43:56Any dip should be bought into in that sense.
00:44:00It's a bull call coming in on Jindal Stainless.
00:44:03Like Amit said, he is playing momentum and hence recommending that stock.
00:44:06What about HUL? So you have got one risk on and one risk off trade, I noticed.
00:44:11What is the view on HUL? Constructive on this one too, I believe.
00:44:15Yeah, I am bullish on Agin.
00:44:17Actually, it's very difficult to find a short candidate in this market with the kind of rally that we have had yesterday.
00:44:25Apart from granules, which again, I mean, that is newsletter and the fall has been fairly precipitous.
00:44:31So I really can't build further shorts over there.
00:44:34Hindustan Unilever and the entire consumption and FMC space has been an uptrend in the last three, four months.
00:44:42I continue to be constructively bullish on Hindustan Unilever.
00:44:46Even here, the structure is very simple. It's creating higher highs and higher lows.
00:44:51Also, if you look at the open interest and the long buildups, I feel that there is some more room on Hindustan Unilever to go on the upside.
00:45:01However, this counter has already had a very sharp run up.
00:45:05So I would advise traders to be a little circumspect when planning this bullish trade.
00:45:12However, the trade is as follows.
00:45:14We would look to buy a 2940 call and sell a 2980 call.
00:45:19The profit target and rupee stop loss is again in my ballpark of about 3000 rupees.
00:45:24However, we would want to wait a little and any dip in this counter during the intraday could be looked at an opportunity to enter longs here.
00:45:50One stall that Amit mentioned as well, which was Granules, was one of your big losers in trade yesterday.
00:45:58With the recent suspension of its facility, it seems like all hell has broken loose.
00:46:03But Motilal, I believe, doesn't think so.
00:46:05Varsha standing by with more on that.
00:46:07Varsha, Granules unfortunately didn't participate yesterday for reasons that were very company specific.
00:46:12But some brokerages are still constructive on the counter.
00:46:16Well, yes, Amina.
00:46:17So yesterday we saw pressure on the stock now due to the USFDA observation at the Hyderabad facility considering data integrity issues.
00:46:25But Motilal Oswal still has a buy rating on the stock with 20% upside potential now because it expects 36% earnings CAGR over FY24-26.
00:46:36Now, the six observations were related to cleaning and maintenance, inadequate root cause analysis, document management and procedure for in-process controls and air purification units.
00:46:47Now, companies expected to implement remediation measures to address those issues and the classification of inspection from USFDA to understand the sustainability of compliance with regulatory guidelines is awaited.
00:46:59Now, currently, the good thing is that there's no major product approval spending from the site.
00:47:04Until date, Granules has gone through almost 24 USFDA inspections since 2009.
00:47:10And out of 24, Gargilapur, this Hyderabad facility, has been inspected six times with voluntary action indicated or no action indicated classification, which is actually a good thing.
00:47:21This facility has a capacity of 23,200 tonnes per annum for pharmaceutical intermediates and 26 billion units for spinach doses.
00:47:29And this contributes major revenue for the company and has presence for its global operations.
00:47:34Granules is actually focusing on building a niche pipeline in the oncology space and large volume products and innovative tech products and backward integration.
00:47:43This is the reason that Motilal is expecting 36% earnings CAGR over 24, 26.
00:47:50And this is the reason that they've given a buy rating.
00:47:52But they do mention that this Gargilapur inspection is a near term hurdle for the US growth.
00:47:57We'll watch out for this.
00:47:59Let's see if it reverses some of its lost fortunes from yesterday, Granules India, but clear slam dunk on this one.
00:48:08So do keep an eye out for this.
00:48:11Let's also keep an eye out on some of the specific stocks which are on our watch list.
00:48:15So let me start by telling you about the first four.
00:48:20So HPL Electric is in focus.
00:48:23A 144 crore order for smart meters.
00:48:26Usually smart meter orders bring about some excitement.
00:48:29Watch out for this.
00:48:30Watch out for Panesha Biotech.
00:48:32USDFC has committed to a 20 million dollar loan.
00:48:37Could be active today.
00:48:39HG Infra has gotten a Central Railway order of 716 crore rupees.
00:48:45Usually this stock reacts on order wins.
00:48:47Tata Power has signed an MOU with Tata Motors for ECVs.
00:48:51And therefore, this stock could also be in focus.
00:48:55Well, a few more to add to that list.
00:48:58Nazara Tech could be a big mover in trade today.
00:49:00They've put aside 982 crores for an acquisition in Pokerbazi.
00:49:06Bharti Exa, there's no stopping these names.
00:49:09Jefferies upgraded the stock this morning.
00:49:12The target price revised to 1600 rupees.
00:49:15And PNB Housing, we told you about this counter yesterday.
00:49:18A big block took place.
00:49:19Singapore government has bought 0.5% stake in PNB Housing.
00:49:23And remember there was a big brokerage upgrade as well on the counter yesterday.
00:49:28Couple of negatives.
00:49:30Watch out for Patanjali.
00:49:31Patanjali promoted to sell about 1.1 crore shares at about a 3% discount.
00:49:35Maybe this stock reacts negatively.
00:49:37And Samvardhana Madarsan or Samil.
00:49:39Citi has a negative note.
00:49:41A negative catalyst watch.
00:49:42InvestTech has downgraded the stock as well.
00:49:45Do watch out for this one on the downside.
00:49:49Let's welcome in Kushbora.
00:49:50Founder at kushbora.com on the technicals.
00:49:53And Chakri Lokpriya of Red Strawberry on the fundamental.
00:49:56Gentlemen, both of you, thanks so much for joining in.
00:49:59Chakri, I'll start with you on this one.
00:50:01This buying that happened yesterday.
00:50:03FI led buying.
00:50:05What explains that?
00:50:07Expectations of a rate cut.
00:50:09ECB move.
00:50:10China saying a lowering of the mortgage rates.
00:50:14What is it?
00:50:15Good morning.
00:50:16I think it's all of the above.
00:50:17You saw that the ECB came in with a big cut.
00:50:21Now the US is talking about, of course, it's going to be a 25.75% probability.
00:50:27But the glide path for the Fed is clearly a number of rate cuts between now and the next few months.
00:50:35Now, when all this happens, clearly, you know, rate sensitives, which is metals, banks, cyclicals such as cement, export-oriented names such as chemicals.
00:50:46These are first to the party.
00:50:48You could say that, you know, metals, there's a big Supreme Court overhang on some of the metal names.
00:50:55So the banking names don't have such problems.
00:50:57So I think, I mean, they want to perform.
00:50:59So I think banking, some of the stocks will benefit as their names will expand when RBI starts following the US Fed cut.
00:51:09Okay.
00:51:11Kush, good morning to you.
00:51:14What do you do with the index indices today, both the Nifty and the Nifty Bank?
00:51:20Do you have a strategy this morning?
00:51:23Hi, morning, Neeraj.
00:51:25Well, you know, given the kind of momentum, the only way to play this is perhaps on the long side, right?
00:51:29I mean, you can't go short, you can't sit this one out.
00:51:32The only concern being that, you know, yesterday also we were discussing that, you know, there are a few technical parameters, at least on the Nifty, which aren't really, you know, as comforting.
00:51:42You know, namely a couple of negative divergences on the daily and the weekly setup and the monthly RSI shooting over 80 once again.
00:51:48Last time it happened, you know, the Nifty saw a cut of 4-4.5%.
00:51:52So a couple of these factors playing out, but from a very near-term perspective, you know, the momentum very clearly is there.
00:51:58What happened yesterday could be and in most, in all likelihood will be a rare event.
00:52:03But that said, you know, we've taken out the previous highs on the back of good volumes.
00:52:08I think from a near-term perspective, you could look at 25, 550 and 2700 as the next target.
00:52:1425,100 is coming in as a good support.
00:52:17But as I said, I'm a little more constructive on the Bank Nifty purely for the fact that, you know, we've seen, you know, a good range breakout on this one.
00:52:25While 51,800 remains, you know, a bit of a near-term resistance. We're very close to that.
00:52:30I think if we do sustain above that level for some time, I think, you know, another thousand points of rally, you know, can pretty easily be expected on the Bank Nifty.
00:52:39So I'm a little more constructive on the Bank Nifty.
00:52:41As long as, you know, on the downside now, the resistance, which was the 50-day moving average will act as a support.
00:52:48So 51,400, 51,350 zones, as long as that is held, you should continue to remain long.
00:52:53If you don't have a long position, you could consider initiating a fresh long position.
00:52:57Intermediate targets being 50 to 200 and then, of course, 50 to 800 as we spoke.
00:53:02A little more constructive on the Bank Nifty.
00:53:04How things change so swiftly, right? And you can't find liquidity.
00:53:07We've talked for so many days, early this week as well, you and you were very, very negative, both indexes, right?
00:53:13Now, of course, constructive on Bank Nifty.
00:53:16Now, of course, if any, most traders mustn't have been sitting long on the index, because I think the advice going out by most people was that avoid the Nifty, avoid Bank Nifty.
00:53:26The breakouts aren't happening. Breaches are not taking place.
00:53:30Today, as we see it, there is a sense, at least on the F&O side of the data, that there could be some long unwinding at these levels.
00:53:38So there will be a blip from what I'm expecting either today or early Monday.
00:53:42If that does happen, are you constructive on Bank Nifty and recommending a long trade?
00:53:47And if yes, please share levels because that just gets easy to actionable then for our viewers.
00:53:53Sure. So what happened was on the Nifty, when we saw that pretty much a surprise blip on the downside on Friday,
00:54:02that perhaps put in a word of caution on the street and in the mind of traders and investors, it was well warranted.
00:54:09It wasn't really something that you would want to ignore, such a big selling completely out of the blue.
00:54:15But there too, the Nifty was actually respecting the 20-day moving average for the most part.
00:54:19So there, the caution was still warranted.
00:54:22Now, Bank Nifty was a slightly different setup.
00:54:25And we've been speaking about this, right?
00:54:27The base for the Bank Nifty shifted from 49,800 to 50,800 to another 1,000 points, which is 50,800 to 51,800.
00:54:37After the Friday blip, Bank Nifty was quite quick to recover and come into that same zone again.
00:54:42So I still believe that Bank Nifty has a lot more room.
00:54:45There has been a lot of squeezing that has happened.
00:54:47And hence, you're seeing a breakout.
00:54:49Yes, after such a big rally that we saw yesterday, there's a possibility that you might see some profit booking today.
00:54:54But as I said, as long as these support zones of now close to 51,350 are maintained, you could stay long on the Bank Nifty.
00:55:02If you don't have a position, that's your stop loss.
00:55:04And you could very well go in for targets of 50 to 200 and 50 to 800.
00:55:09Right.
00:55:10Implied Nifty is indicating to a 70-point gap up this morning.
00:55:14Kush, top trading strategies beyond the index this morning?
00:55:18Sure.
00:55:19A couple of stocks, a mix of F&O and cash stocks.
00:55:22UltraTech Cement, this stock too, like the Bank Nifty, if I compare, has had a squeeze and then broken out of the range.
00:55:3011,500 was the resistance zone that took some time to cross.
00:55:35But yesterday, on the back of good volumes, it was able to successfully close above that.
00:55:40So I think this momentum could continue.
00:55:42So for a trader, 12,000, 12,300 are the targets to look for.
00:55:4511,400 is a good support zone, so that should act as your stop loss.
00:55:49On the cash segment, there is Shilpa Medicare.
00:55:53Now, this stock has had a phenomenal run but continues to surprise on the upside.
00:55:58So if you want to consider a long position, your targets would be 910, 940, 875 is a good support zone.
00:56:05So that should act as your stop loss now.
00:56:07Right.
00:56:08We'll take a quick break.
00:56:09On that note, we'll come back here after pre-open.
00:56:11It looks like a positive start for the trade this morning.
00:56:13So stay tuned.
00:56:27We'll be right back.
00:56:57Thank you.
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01:00:25All right.
01:00:26You take your seat.
01:00:27As I was saying…
01:00:28Sorry, I'm afraid I'll unmute myself.
01:00:29Chakri, you're on mute, I think.
01:00:31Sorry, I can't hear you.
01:00:33Sorry.
01:00:34A couple of things on the portfolio positioning perspective which is, one, all the underweights
01:00:41of the private banks, things like HDFC Bank, ICICI, those underweights will now kind of
01:00:47manage some of our weights so that they are to lower tracking errors. Second, on the other hand,
01:00:53for the Alpha, I think we will still focus on the State Bank of India, Punjab TNB Housing,
01:01:02Canberra Bank, all the PSU banks, because their treasury profits will be the fastest
01:01:08to recover whenever there is a rate cut. And now RBI will cut sooner rather than later.
01:01:14Hmm. That's the word coming in on banks. We're getting up a pre-open trade. It's expected to
01:01:18be a muted start with a small uptick in early minutes of trade. Remember, yes,
01:01:23there's a shortcoming red rally with new record highs being made in the last hour of trade.
01:01:28It's a little all over the place. We'll come back to it shortly. The Sensex lower, the Nifty higher,
01:01:32Bank Nifty and other sectors will be important. Tech stocks would once again be
01:01:37in focus on back of this global queues. Kush, let's talk about a few more stocks in trade.
01:01:44And I want to start with Tata Motors and Bajaj Auto. Bajaj Auto made a record high,
01:01:48four straight days of gains. Does it still look good? Would you play into strength and go long
01:01:53in Bajaj Auto? Kush, you're on mute. Not at the current juncture. I would wait for a dip on this
01:02:04one. The stock has done phenomenally well and the volumes have picked up. There has been positive
01:02:09news flow also going for it. But it's entered overheated territories now from here on the risk
01:02:14reward ratio may not be as favorable. So I would wait for a pullback, for a dip, let's say close to
01:02:2011,000, 11,100 kind of zone. So from a trading perspective, that's where the risk reward ratio
01:02:25will become attractive for me. The support zone coming at about 10,000, 700 odd levels. So I can
01:02:30place a stop loss there and then play for higher targets of 12,000, not at the moment, but have
01:02:35closer to 11,100. So by the dip on Bajaj Auto, if and when you get that. Tata Motors has had that
01:02:43dip. I think it was a couple of days ago when Neeraj and I had this conversation that yes,
01:02:48there is room on the downside, the stock would fall, but 970 thereabouts is a good support zone.
01:02:54If you see the low that the stock made yesterday, it was also close to that 950, 960 mark.
01:02:58I think it's approaching these support zones. I think if you're an investor and if you're looking
01:03:03at a medium term to a long term kind of buy, these dips in stocks like Tata Motors should
01:03:09be utilized as a buying opportunity. Not so much from a trading opportunity, just because yesterday
01:03:13was the first day after, what, 8, 10 sessions of fall that the stock was consolidating with
01:03:18a positive bias. From a medium term perspective, yes, the stock is starting to look attractive
01:03:24technically. So if you want to start accumulating, this is a good level.
01:03:30Chakri, Neeraj and you discussed banks. Let's discuss tech stocks. I mean, if history has to
01:03:37have it, tech stocks usually do quite well after the rate cut takes place in the US. Some may argue
01:03:43that's already in the price because tech stocks have been doing well in the last couple of months
01:03:47now. But at the current juncture, keeping risk reward in mind, would you add any tech stocks to
01:03:52your buy list? Absolutely, we'll still buy tech stocks. And I think tech stocks will now
01:03:59go to an overweight position amongst the portfolio, simply because it's a low risk way of
01:04:06investing. At the same time, there's sufficient upside in TCS, there's Tata, Alexi, Infosys,
01:04:15all the frontliners, they all have sufficient upside, a good 15-20% or less than 6-8 months
01:04:22from now. All the good news of the order book starting to revive, the margin starting improving.
01:04:30In any case, the rupee fall will also kind of a little bit help them. But more importantly,
01:04:35demand revival is key, which will come back and therefore ITS.
01:04:39Okay. You know, the other tech and telecom and telecom has been the buzzing space. Now,
01:04:47let me get across to Harsh, who joins in right now for the top brokerage call of the day. And
01:04:53Harsh, I wouldn't be surprised if there is a telecom stock on your list.
01:04:57Yes, absolutely, Neeraj. Good morning. So we have, of course, Jefferies on Bharti Airtel,
01:05:01but the more interesting one is Jefferies on Bharti Hexagon. 25% upside from the current
01:05:07market price and 29% upside from when they wrote the note is what yesterday also quite a sharp
01:05:13move and therefore that difference. But that's what Jefferies is really building in. What they
01:05:18believe is Jio's growth target may require some tariff hikes and those may be on the anvil.
01:05:25Recent lead indicates that there's already steps being taken in that direction,
01:05:31which is obviously a positive. There's a rising focus on monetization for the sector as a whole.
01:05:37And of course, this gives more indications of hikes coming in in 2025 as well. Now,
01:05:44Vodafone Idea's market share continues to fall, which is beneficial to Bharti Hexa. And by the
01:05:50time Vodafone Idea completes its network investments, it may further see market share
01:05:55decline. That's what really Jefferies is building in. And that decline could actually help someone
01:06:02like Bharti Hexa. And therefore, there is a gap with regard to the need for higher both tariffs
01:06:11as well as lower market share. And that gap is what Bharti Hexa will bridge. That's what Jefferies
01:06:19seems to be believing. So they are building in two tariff hikes in Q2 FY26 and Q2 FY27.
01:06:27And they're forecasting FY24 to 27 revenue at 19% CAGR and EBITDA at 25% CAGR. They're valuing
01:06:37Bharti Hexa at 14.5 times EV to EBITDA, target price 1600, 25% upside, near 25% upside even from
01:06:45yesterday's close. Okay, well, you know, this is a stellar move because Bharti Hexa was up about 4,
01:06:544.5% yesterday, and it's starting off another 3, 3.5% today. Chakri, you spoke about tech,
01:07:00what about telecom? Let's start with that. I'll go to Kush as well on these trades. But
01:07:04fundamentally, a Bharti Airtel, a Bharti Hexa, it's almost funny, right, Chakri? Everybody was,
01:07:11traders were betting on Vodafone doing well. And what has done really well has been Bharti Airtel
01:07:18on a relative basis from the time that the foreign ministers or the investors put in money into Voda.
01:07:24What's the call on an Airtel, on a Bharti Hexa, on an Indus Tower, any of these?
01:07:31You're right, Neeraj. I think clearly what is happening is Vodafone continues to need a lot of
01:07:37capital to survive. Mind you, the key word here is survive, not grow. And that is clearly reflecting
01:07:44in the market share losses, the amount of capital raisings the company is doing. This is not clearly
01:07:50the backdrop for a company to go ahead and compete. And in that backdrop, companies like,
01:07:55not Jio, not like, there are only two or three companies in this industry. So Jio, Bharti Hexa,
01:08:00all these are taking away market share. Now, the whole industry is penciling in roughly about 10%
01:08:07tariff hikes over the, let's say, next one year. But now there is clearly room to raise it much
01:08:12more because global rates versus global rates, et cetera, is still hardly a fraction. So which
01:08:18means when the raise rates more than 10%, then clearly it will benefit Bharti Hexa as well as
01:08:24Jio. Kush, would you trade a Hexacom now that it has gone up 4% yesterday and it's starting
01:08:31off 4% higher today? So you're technically buying it 8% higher from yesterday's opening price.
01:08:38But Neeraj, just before that, a quick word. I don't think your viewers would be complaining
01:08:42because Vodafone and Bharti was a debate that I had with your fellow anchor,
01:08:49co-anchor. And every time I voted Bharti and I don't think Vodafone has done anything.
01:08:55Bharti continues to do well. That remains a good pick. Any kind of dip or decline that you get
01:08:59should be taken as an opportunity to buy. Vodafone continues to reel under pressure.
01:09:03So you might want to keep a track, but then not really something I would trade.
01:09:07Coming to Bharti Hexacom, you're right. And it does look like a good stretch from
01:09:13yesterday's opening price. But from whatever limited data we have on the chart, it's not
01:09:17even close to overheated territory. So positionally, it'll not be a bad idea to play for 1420,
01:09:23perhaps even 1480 kind of levels on Bharti Hexacom. A good support zone comes in at 1270 kind of zone.
01:09:29So that's where you place your stop-loss. The momentum continues to build. The averages
01:09:33continue to slope upward. For the moment, I think everything is going for it. So not a bad
01:09:38idea with a stop-loss of 1270. Continue to hold or add Bharti Hexacom.
01:09:44Add Bharti Hexacom. That's the word coming in.
01:09:47Chakri, what consumption name do you still think could see some value buying emerging at? I mean,
01:09:54an ITC, HUL, Godrej Consumer. I don't know whether Neeraj talked to you about gold stocks,
01:10:00Kalyan, PC Jewelers, Titan. All of these are still looking good despite the recent run-up,
01:10:08actually. Indeed. I think consumption is more geared towards the Titans and the Kalyan Jewelers
01:10:14because that is what you call sustainable consumption rather than FMCG. And FMCG,
01:10:23you know, clearly they are not valued. They are expensive stocks with no real
01:10:28triggers for growth. If there is any new factor which will cause it to re-rate.
01:10:35So you still buy Atata Consumer, Varun Beverages, Titan and Kalyan Jewelers.
01:10:42Titan, Kalyan Jewelers and Varun Beverages. Those are a few stocks that Chakri likes
01:10:47at the current juncture. Apart from that,
01:10:50Kush, what are you expecting on granules today after a 16% fall yesterday? Do you feel like
01:10:55there could be recovery on the stock and one could look at it for an intraday upmove?
01:11:00So, I mean, I'd wait and watch. And the only reason for that is that with the kind of moves
01:11:05that the market saw yesterday, despite whatever news would have been around the stock, it closed
01:11:11near the low point of the day. So, an hour and a half into the trading session or towards close
01:11:18when the markets were phenomenal, the stock did not see any kind of recovery,
01:11:23any kind of an upmove. So, I would wait. I wouldn't be the first one to jump and buy.
01:11:28For me, the key levels on this one are around 525. That's where a good support zone comes in.
01:11:33I want to see if the stock tests that. Even for the day, if I give it a miss and if the
01:11:37stock bounces another, let's say, 5-7% or maybe higher, I'm okay to give it a miss just to get
01:11:42that confirmation that yes, perhaps the worst is behind and the news has been factored in now.
01:11:47So, I won't be the first one to buy. On the downside, I'm looking at a 520,
01:11:51530 kind of a level as the next support zone.
01:11:57Chakri, the oil marketing companies, even on a solid day of trade yesterday, didn't react.
01:12:02The market action is telling us that no matter how bullish people may be,
01:12:07the stocks are probably not in the mood to move up. If you had them in your portfolio,
01:12:12despite this crude fall, would you log out and get into something else as a tactical call?
01:12:19We don't have them in our portfolios and I don't think we'll add them to our portfolios.
01:12:24They are in very inexpensive stocks, but I think what's impending is probably a petrol-diesel price
01:12:30cut. Given all that, it muddles up the margin profiles of the companies. While it's good for
01:12:40the economy and it's good for the consumer, so therefore stay away from oil refining companies.
01:12:55Since the pre-open rates have settled, I'm tempted to ask you, you were given two stock ideas, but
01:13:00if you had to bet on one stock for a trade today, maybe it could be an intraday trade
01:13:05or a positional trade for a couple of days, what would that one top stock idea be?
01:13:11So, HPL Electric, I think there was a positive news as well on this one. It's looking up and
01:13:18with this kind of a gap up, it is looking at a breakout of the recent fall that you're looking
01:13:23at. So, that is one stock that I have on my radar. On the upside, you're looking at 625
01:13:29and 640 levels as the target there. On the downside, yesterday's closing,
01:13:35perhaps close to the 600 level or a little lower, 595, that should act as your stop loss.
01:13:40So, you could look at HP Electric as well. A couple of other stocks also, but then perhaps
01:13:46I'd wait for the markets to open and settle and then perhaps take a view. The buy on Ultratech
01:13:51and Shilpa Medicare continues. A quick check on Muttut and
01:13:56Mannapuram Finance as well. They should be reacting well to those increase in gold prices,
01:14:022.5% each on both those counters. Samvardhan Madasumi has a downgrade and that counter could
01:14:07be one on the sell side. HG Infra has won an order. The stock looks good in early sort of
01:14:13pre-open tick. So, all in all, HG Infra is up 5% now. So, it's looking healthy as we see it in
01:14:18early minutes of trade. But a couple of more stocks that we'd like to discuss and I don't
01:14:24know whether you talked about Metils, Shakri. How do you feel about it? Yesterday's gains,
01:14:31rather unexpected, could be on back of global commodity prices moving up, but with the rate
01:14:36cut around the corner, usually garners well for Metal names. Any low-level buying amongst counters
01:14:41where you're spotting value? And this doesn't have to be a long strategic call, right? Anything
01:14:47tactical that you'd look to add to the portfolio for four to six weeks? Yeah, from a tactical
01:14:52perspective, Jindal Steel and Power, JSW Steel, these are the couple of companies because these
01:14:59companies do not have mining exposure where they have to pay up to the various states of Supreme
01:15:04Court ruling. Keep that in mind. Normally, if you didn't have the Supreme Court ruling, you'd
01:15:09have gone and bought all kinds of Metal stocks, but now you'll have to be more selective.
01:15:14Well, that's the call coming in on some of these mining companies.
01:15:18Kush, is there anything you like amongst Metal stocks?
01:15:23So, JSW Steel was looking attractive yesterday. The kind of move that it saw places it above
01:15:30some of the key averages. 960 is where it's opening. This is also a level where it has
01:15:36resisted previously. So, if it does tend to sustain above this, then you're looking at the
01:15:41move towards 975, 990 also. But just a word of caution, Metal stocks have seen fair share of
01:15:47volatility. So, do keep your risk management practices in place. A stop-loss for this one
01:15:52comes in at 935. Okay. And Metal might not be a bad play considering the fact that they led the
01:15:58rally along with maybe banks in trade yesterday. So, Kush, thanks for that. Gentlemen, stay on.
01:16:03Maybe just taking quick opening thoughts from you before we thank you. But the first rates
01:16:08will be here soon. And keep in mind that while we'll start off on a much more sedate note
01:16:14related to the big bank close yesterday, the question is, can banks continue to do
01:16:19what they did yesterday, despite a rather quiet start by some of them in the pre-open session?
01:16:25Here come the first trades. Well, flat as flat can be. The nifty IT should come up on your screen
01:16:32because all the others are trading flat. So, here's the four major indices, all of them flat.
01:16:38Bring up the small caps and mid-caps just to see what's happening there. About a third of a percent
01:16:44for the mid-cap index, the small cap, about half a percent. You know, I don't think there should be
01:16:49too much of a disappointment that there is no follow-through. If it has to come, it'll come
01:16:53a bit later on as well. So, completely fine. Let's pull up the heat map. I think banks are quiet
01:16:59and most of the market is quiet. You don't quite see a major reaction into anything at all. So,
01:17:06the losers, Asian Pins, Adani Enterprises, Divis, all of them down less than a percent.
01:17:12On the gaining side, Indalco, JSW Steel, Tata Steel, so metals continue to rise and shine.
01:17:18There's some strength in Bajaj Auto. Nestle, TCS, Britannia are some of the others, but it's a very,
01:17:24very quiet morning. Samina, I guess I'll have to hand it over to you very, very soon because
01:17:29there is hardly anything to talk about on the nifty, but for the fact that metals are doing well
01:17:34and Bajaj Auto continues its screaming run. What a move this one is having. Yeah, so it's
01:17:4250 days of gains, it hits a record high. But yeah, there's nothing to be surprised or worried
01:17:47about after such a sharp move yesterday, the markets are taking a little bit of a consolidation
01:17:52break. Shouldn't be surprising because you also saw on the futures and options side of things that
01:17:57there was long unwinding that data was indicating to, which could potentially mean that the upside
01:18:03for today at least may be capped. But who's to tell if Europe opens up with a big rally,
01:18:08we may follow suit. But for now, it's an average looking market. It's a Friday when traders may
01:18:14not want to take aggressive bets going into the week of a Fed rate cut. Media is looking okay.
01:18:19Real estate looks fine. Metals is gaining. Broader markets are performing better than the benchmark.
01:18:24Yesterday, the gains were led from the front. So, large cap stocks were up and about with all your
01:18:29nifty-fifty gaining and closing in trade. Today, of course, it's the broader market universe that
01:18:34is looking a lot more better than the benchmark itself. Lots of smaller stocks across the broader
01:18:39market universe that could potentially be the movers of the day. Let's talk about gold. Gold
01:18:44prices hit a record high. They were up 1% in trade and on back of which you would imagine some of the
01:18:50gold counters to do really well today. Also, there have been brokerage upgrades. The Titans and the
01:18:54Kalyans of the world have got brokerage upgrades. Titans flat, but Kalyan Jewelers is up 2.5%
01:18:59and PC Jewelers for the same reason trades with a gain of 3.5%. The other space on back of gold
01:19:05that is active or should be active is gold loan companies. So, Mutoot is up 2% and Manipuram
01:19:11Finance is up 2.5%. This is all on back of higher gold prices and the outlook for gold looking fairly
01:19:17bullish in the near to medium term. The other vertical that's in focus is Stelcos. This week
01:19:23was about Vodafone versus Bharti for the large part of the week. Today, of course, you've again
01:19:27got a few long trades. Bharti, Exacom, Jefferies has upgraded the counter, raised its target price
01:19:33to Rs. 1,600 from Rs. 1,200 on back of which Bharti, Exacom is the big gainer this morning,
01:19:39up 7%. So, very, very sharp up move into that stock as we see it. Granules was a big loser
01:19:45yesterday. Remember, all hell broke loose on back of a facility of theirs getting shut down. The
01:19:49stock sold off on large volumes. Motilal has come out and reiterated that they still like the
01:19:54counter despite what has happened to the facility. The stock and the investors not taking that to
01:20:01their heart just yet. The stock continuing to add to yesterday's sell-off down about 3.5% as we see
01:20:07it. But it wouldn't surprise me at some stage the buying could come back into granules over the
01:20:12course of the day. The other one that I want to pull up is AG Infra. They bagged a fairly
01:20:17significant order on back of which the stock is up 3.5%. Nazara Tech is talking about a pretty big
01:20:23acquisition. The stock should be reacting to that as well, 1% higher on that. And BLS International,
01:20:29they have acquired a citizenship company in Dubai. The stock reached the gain of 1-1.5%.
01:20:35Patanjali Food, I believe there's a block that's taking place. The stock is trading
01:20:39with a 3% cut as we see it. And Godrej Agro, not sure what's happening there, Neeraj,
01:20:43but a 4-4.5% up move on Godrej Agro. I think there's a large trade there too.
01:20:48These days, some of these stocks don't leave,
01:20:57I mean, certainly leave you surprised sometimes with the kind of moves that are happening.
01:21:01But I must say from amongst the nifty 500, the stocks that are really making a move,
01:21:05Patanjali Foods on the block deal was expected to happen at a 3% downtick and that's the way it is.
01:21:13On the gaining side, not too many names, maybe a Macrotech, Vedant Fashion, Campus Activewear
01:21:20are amongst the key ones. Kim's is up about 5%, so that's probably the top gainer.
01:21:24Watch out for that. Okay, quick opening thoughts. Kushbora,
01:21:29flat as flat can be. Nifty Bank, marginally in the green. Anything that stands out?
01:21:38Anantraj does. The stocks actually had a good run over the last couple of days and
01:21:42today too, if you see, it's opened up. The volumes on open are also pretty encouraging.
01:21:47So, I think this up move could continue if you're looking at it from a near-term trade perspective.
01:21:52Also, it's not a bad idea, 665-680, the levels to look for on the upside, a tight stop-loss at 635.
01:21:58So, I think Anantraj, steadily but surely on the way up. So, that's one trade that can be considered.
01:22:06Chakri, we've spoken about all of the major indices, real estate, a spate of QIPs have
01:22:14happened. A lot of companies have gotten successful fundraising done as well.
01:22:20Are you constructive here or has it run its course?
01:22:24You know, probably if you want to buy Silk, you probably can buy DLF. Revenues will probably grow
01:22:3110% for DLF plus the industry. So, that's a good number, which is GDP plus type of number for real
01:22:39estate. But other than that, stocks have really run up, including DLF, but there's still a trade
01:22:43in DLF left. Chakri, Lok, Priya, Kush, Bora, Ajay, both of you, thank you so much for taking the
01:22:49time out and being with us and giving us your thoughts. Really appreciate your time. Well,
01:22:53we may not be at life highs to this morning, but we certainly notched in life highs in trade
01:23:00yesterday. Let's welcome in Manish Sonthalia, Director and Chief Investment Officer at MK
01:23:04Investment Managers with his thoughts. Manish, great having you. Thanks for taking the time out.
01:23:09I hope all is well. Pleasure.
01:23:10But not too much to complain, Manish, isn't it, with the markets doing what they are doing?
01:23:16So, the amount of liquidity that is there in the system, plus reports suggesting that USD,
01:23:24INR carry trade has also started. And given that the US is about to cut rates,
01:23:31this can only get exaggerated. So, I think it's liquidity. Liquidity is driving momentum.
01:23:36Momentum is driving sentiment. Sentiment, again, moving the markets higher and it's now into
01:23:41virtues. I think the key point to note out here is where is the valuation comfort.
01:23:47And most of the sectors are trading at higher valuations, but valuations are always a function
01:23:55of liquidity. So, I think it is basically picking individual stocks. There is no point taking a
01:24:02call on the entire market, but broadly 75-80% of the market is trading expensive.
01:24:07Manish, hi. It's also Samina joining in. One more thing that I heard on the street,
01:24:12and please tell me if you're right or wrong, is that one of the factors that led to that
01:24:18big move in the second half of trade yesterday was probably the release of 3 lakh crores that
01:24:23was blocked out for the Bajaj Finance IPO. Is there any truth to this? Because I'm assuming
01:24:29if foreigners have come in to subscribe to this and the money has now been released,
01:24:34they might as well wait till the Fed cuts rates and then take the money out, right?
01:24:38I mean, look, there is interest in India, that is for sure. And obviously, liquidity that was
01:24:51stuck in Bajaj housing could have got released second half yesterday or maybe today morning.
01:25:00Plus, the currency in the US doesn't look like too supportive at current levels.
01:25:07DXC is on a weakening path. So from that point of view, money is flowing to emerging markets and
01:25:13a lot of that might come to India as well. And since large caps have not broadly done well
01:25:19in a while, we are seeing more interest in large caps and primarily institutional money that would
01:25:26actually move the index even higher from these levels. Having said that, market cap to GDP,
01:25:31all those numbers have crossed all time highs in India. So there has to be a word of caution
01:25:39around these levels. But it's basically the power of liquidity and momentum.
01:25:44Absolutely. No one can fight momentum. We can just sit here and rationalize this
01:25:48differently every day. Manish, I know we've talked about large cap and we've talked about
01:25:53large cap extensively from the mid of last year. Time and again, the anticipation has been that
01:25:59foreign money will come in and when they come in, large cap is the space that goes up. But contrary
01:26:04to that expectation and belief, and I know a lot of portfolios were hoping and waiting on that,
01:26:09it's the broader markets that have witnessed our performance. From where we stand,
01:26:13if we again hopefully lead from the front and the nifty 50 becomes the first mover,
01:26:19where would the buyers sit? What stocks would it be? Would it be banks? Again, that's a trade
01:26:25that hasn't played out yet after many months of waiting. Would you buy banks? If yes,
01:26:29would you buy private sector banks and HDFC, ICICI, Kotak, still looking good for portfolio additions?
01:26:38So, over the last few years, FIIs have been net sellers. We have not got too much of foreign
01:26:46smart money or institutional money, so to speak. All of that has been primarily domestic money.
01:26:52And the power of the markets has been led by the retail investor and it's quite a matured
01:26:59set of investors. Because India was coming off a low base and numbers, the loft, small numbers,
01:27:06basically mean that small cap, mid cap segment, growth rates and earnings were much higher than
01:27:12the large cap space. And obviously, they have done much better than the large cap space.
01:27:16Now, the valuations today, we are trading maybe 22 times for 26 numbers. Is that grossly expensive?
01:27:24No. In 2007-08, we have gone to as high as 25p on a one year forward. Can markets move to those
01:27:32high levels? Yes, it can. But three out of four names across the market, whether large cap,
01:27:41mid cap, small caps are expensive out of 57 sectors that are there.
01:27:47Where do we hide in this sort of a market? I think the idea is to buy into moderate growth
01:27:54companies at moderate valuations rather than looking to buy the best growth companies at
01:27:59the highest valuation. In this way, one can actually reduce risk. Sectorally, you can
01:28:05hide in pockets like banks, financials. This includes insurance or health insurance of fintech
01:28:13or platform companies in the fintech space. You could find shelter in IT companies because IT
01:28:19companies would likely do well beginning second half of this year, continuing into the first half
01:28:26next year. And obviously, rate cuts in the US is only going to help. And the third is obviously,
01:28:32a lot is happening in the pharmaceutical space, considered to be a defensive space,
01:28:36and India has got new growth triggers for it to carry forward. It is a very large space.
01:28:43But I think these are broadly sectors where one can find some solace. One dark space,
01:28:51dark spot, so to speak, is basically your housing, building materials.
01:28:56Post-election announcements last year, the space has been quite subdued.
01:29:02There has been correction. We have seen the interest that is there in mortgage finance
01:29:06companies. There's a precursor to what you could see in the actual housing space across all
01:29:13parameters. So I think these are the four areas where I would find comfort taking money off the
01:29:20table in top-down brilliant sectors like your capital goods, defense railways. I get it. It is
01:29:29a fabulous sector from the next five, seven years' point of view. But near-term valuations are
01:29:34probably discounting the next five years of earnings. That is to say, there has to be a lot
01:29:39of price and time correction if one needs to make money. So not yet there in terms of what the
01:29:45correction has to happen in the space, so broadly taking money out from that space.
01:29:50This is how I will be actually strategizing my portfolio.
01:29:55Okay. Manish, the other question is, you spoke of USDA and our strength. There is
01:30:02clear direction of crude, even if there is piecemeal bouncebacks that happen. Does all
01:30:08of this therefore augur well for directional flows from the global side into India? Because we know
01:30:14that the domestic money is there. So that is continuing. Can global money come in because
01:30:20of all of these factors, because of positive Indian macro and rate cuts all happening,
01:30:25even at these valuations? And therefore, does it take the markets to bubble territory?
01:30:32Surely can happen, because as I said that if the dollar index is to weaken and it has been
01:30:39weakening, emerging markets do tend to be getting the flows. And this has happened in the past.
01:30:47And obviously this time around also, this is likely to happen. In this entire equation,
01:30:53China is on a back burner. So next big Indian market and next big emerging market is basically
01:30:58India. We have started seeing off late a lot of USD-INR carry trade happen,
01:31:06because they are borrowing USD and because interest rate cuts are happening, there would
01:31:10be a tendency for the dollar to even weaken further, triggering further carry trades into
01:31:16India. From that point of view, I think where will the money go? I mean, the first allocation
01:31:21will be to the last step, index mint. It is going to be a beta play, because you are clearly
01:31:27minimizing your risk and earning that spread. And this will have a bearing on your nifty
01:31:3450 and BSE Sensex to say the least. There will be certain spaces which will get higher allocation
01:31:40within the nifty 50 sector where there has been some degree of underperformance. Margin of safety
01:31:46in terms of valuations are clearly there, the financial space, the IT, the pharma. And the
01:31:51others would, within the nifty would be slightly underweight. So in that of, I think the best way
01:31:59to play with this is basically smart beta within the index names. And that is how this is likely
01:32:06to play out. So it can go into a bubble territory, because markets move on liquidity and there is
01:32:12plenty of liquidity that is waiting to come to India. August was the first month that we saw that
01:32:19there has been institutional buying worth 35,000 crores net positive. And that augurs well and
01:32:26it is a precursor to more things like this to come. Well, music to the ears of the bulls,
01:32:32great for fund managers, great for news channels to report on. So well, everybody is happy. Manish,
01:32:38all the best for maybe a continuation of a very strong ride. But thank you so much
01:32:43for talking to us today. It was important to have you. Thank you for being with us.
01:32:47That's the view from Manish Sonthalia. And by the way, so that's Manish Sonthalia's view. Samina,
01:32:52one more very interesting view. And the gentleman says that if the business has potential,
01:32:57why not hold on to it for a long time? This is in for just Sanjeev Bhikchandani or dare I say,
01:33:05somebody has gotten this consumer tech investment space completely right. He recalled a conversation
01:33:11with late Rakesh Jhunjhunwala and his investment in Titan as well. Listen into a slice of this
01:33:17exclusive conversation with Sanjeev Bhikchandani.
01:33:20India needs patient capital. As an investor, we have to be patient. I recall speaking to the
01:33:26late Mr. Rakesh Jhunjhunwala about four or five years ago, maybe six years ago.
01:33:32It was COVID time and it was a Zoom call. I had just called him up. And he told me
01:33:40one very important thing. He said, Sanjeev, if you find a truly great company,
01:33:48then stay forever. You don't have to exit. And if you stay forever, you can make huge returns
01:33:55in the years to come. He said, that's how I made my returns in Titan. I stayed for a long,
01:34:01long time. I'm still staying. And you need to be very, very patient.
01:34:06Right. And do you believe that both of these companies in terms of your investment as well
01:34:13as in terms of their path to profitability have overachieved what you would have thought of when
01:34:21you invested in them? No. If somebody told me that the motto would be between 25 and 30 billion
01:34:29dollars, you know, I would have said you're smoking something. Likewise for Policy Bazaar.
01:34:36So you can't predict the future. The question is, you stick with what you see, which is,
01:34:40are the founders good? Is the idea good? Is execution good? Can they make it happen?
01:34:45Now, what eventually turns out, you don't know. You make it sound so simple, sir. But frankly,
01:34:52it's so hard to do as we see with most investors. It's extremely difficult to do.
01:34:58You've got to stay a long time. You've got to understand one thing. Most VC funds are 8 plus
01:35:032 years, 10 plus 2 years. Right. Yes. But for a company from inception to IPO,
01:35:09very often the journey is 12 years, 14 years, 15 years, and then in the aftermarket,
01:35:14see for five years more. So, but you don't have 20 year funds. We have the benefit of being able
01:35:20to invest from a balance sheet and therefore we can stay forever. And a lot of the value creation.
01:35:29Now, we went into Policy Bazaar in 2008. It's now been 16 years. We're still there.
01:35:36We entered Zomato in 2010. It's now been 14 years. We're still there.
01:35:40If we'd been a regular VC fund, we would have wanted to exit by 2016, 17. And we would not
01:35:45have realized this kind of value. So, we are looking good because we waited this long.
01:35:51We are looking good because of the founders, because of the management team, because of the
01:35:55work they did. We are lucky and fortunate that they allowed us into their companies.
01:36:03So, our contribution is a lot less than the management teams and the founding teams.
01:36:09Right. So, you know, your story is truly unique. You started off as an entrepreneur,
01:36:16started with Naukri. Thereafter, did a bunch of other very similar consumer tech startups,
01:36:24driving technology through InfoEdge. And thereafter started as an investor,
01:36:31started a completely new journey. That's so difficult to do.
01:36:34Just talk us through what possibly was your most challenging one or two
01:36:40biggest challenges you faced in this journey.
01:36:46So, what happened was that we had IPO in 2006. We had this cash sitting on a balance sheet.
01:36:53And more and more cash, we were profitable, more and more cash was coming in every month.
01:36:57And the board said, listen, you better use this cash. You can't just let it sit there.
01:37:03So, it was decided that why don't we invest in startups? Now, that was given to me as an
01:37:08add-on assignment in 2007. I was still the CEO of the company then. And I was told that you can
01:37:15invest up to 160 crores next three, four years in startups. Now, by today's standards, that's a
01:37:21small sum of money. But at that time, it was a big chunk of our treasury.
01:37:28In the next five years, we invested about maybe 200 crores across seven or eight, maybe 10
01:37:33companies. Two of those were Zomato and Policy Bazaar. In 2010, I stepped aside as CEO and looked
01:37:41at investing full-time. My biggest challenge then was, do I really have a job? But as the portfolio
01:37:49grew, it kept taking up more and more time. And I, over the years, made it a full-time job.
01:37:58So, what made you switch from founder to investor? You said you did that in 2010. So,
01:38:06what made you do that?
01:38:10The other leadership in the company was ready to take over. The company had told me that,
01:38:15there needs to be a succession plan. So, I was 47 when I quit as CEO in 2010.
01:38:24And Hitesh was ready to take over. He took over and he's done a great job.
01:38:27So, if you look at the market cap of InfoEdge from 2010, when Hitesh took over to now,
01:38:33I think there has been a massive, massive increase. And all thanks to Hitesh and everybody
01:38:39else. And that's to me, of course, to some extent, Zomato and Policy Bazaar do contribute
01:38:44to market cap. But really, then that credit goes to the other founders of Zomato and Policy Bazaar
01:38:51and the management teams there. Now, there are close to 100 startups invested in. Some of those
01:38:57will succeed and are succeeding and are looking promising. So, I think over the next few years,
01:39:03we hope one or two more successes come out. Well, that's one exclusive conversation to
01:39:07another boost for India's semiconductor ambitions. After Prime Minister Narendra
01:39:11Modi highlighted his vision for industry at the Semicon 2024 event, Tamannaah caught up with
01:39:18Regu Ayaswamy, Senior Vice President and Global Head of Internet of Things and Digital Engineering
01:39:24at TCS, talking about their vision and growth opportunities in the semiconductor industry.
01:39:28Listen in. This is a place where there is a lot of excitement happening around
01:39:35the semiconductor arena and the semiconductor focus for India. TCS has been in this business
01:39:43for more than two decades, working with major global semiconductor manufacturers,
01:39:50as well as equipment providers. We work with semiconductor equipment providers who actually
01:39:56make machines and devices that make the chips that is required for the semiconductor industry,
01:40:04and also we work with many semiconductor manufacturers who make those design and
01:40:10make those chips. The role we see in TCS and today we play and we will be accelerating this role
01:40:19is to first in the initial part of the semiconductor lifecycle, which is the design
01:40:26phase, where what we call the system on chip, SOC designs. So we'll be working with the major
01:40:34manufacturers and startups and many companies to design the chip, which includes several design
01:40:41phases. From the design, it moves on to validation and verification, and we'll play a greater role
01:40:47in the verification and validation too. The chips are then goes to the fabs and the TCS doesn't have
01:40:54fabs, but we will be working with many fabs, including our own Tata Electronics fab that is
01:41:00coming up in a few years to actually manufacture those chips. And in the manufacturing of the chip,
01:41:08also the fab, they call it, it involves quite a lot of processes, quite a lot of systems and data
01:41:17and analytics. And today, AI-led manufacturing in the fab industry is one of the prime goals for
01:41:24many manufacturers in the chip design industry. And we will be providing a lot of industry 4.0,
01:41:31smart manufacturing, data-based solutions, analytics, and AI-enabled digital twins
01:41:38for the manufacturing side. So in essence, TCS will be playing a great amount of role in the
01:41:45design of the chips engineering in the front and also in helping achieving the maximum optimization
01:41:53using AI in the manufacturing space. So just let me understand the journey,
01:41:59Mr. Iyaswamy, because if I see it correctly, the focus used to be more on the R&D side as far as
01:42:07TCS is concerned, but you're moving ahead to design and other value-added aspects. Now,
01:42:16how far do you see this going? And can you give us a sense of that journey as well?
01:42:24So the journey is, as I said, semiconductor is not new to TCS. We have been working with them
01:42:32over two decades on many areas. But I think what is really happening is if you take the design,
01:42:39this is now SOCs are becoming very lot of applications. So we have autonomous
01:42:46chips that are coming for autonomous car industry. We have chips that are required
01:42:51for smart grid in the utility industries. We have chips that are required for medical devices.
01:42:57So in the front end, we are looking at the design phase or the R&D phase of
01:43:03designing the chip and ensuring the chip is getting manufactured in the plant.
01:43:08But we will also be working on the downstream application industries as well. So for example,
01:43:15we are building smart meters for utility industry, and those smart meters will have
01:43:21some of the newly designed chips which will carry air on the edge. Similarly, we work with
01:43:28automotive industry. In the automotive industry, we look at, for example, there is to bring some
01:43:34of these autonomous features, we need high-performance edge computing chips. And we
01:43:40will be on one hand participating on the design of the chips. On the other hand, we will also be
01:43:46developing those applications that are required for the automotive industry for realizing
01:43:52autonomous car features. So I think it's not just the R&D of the chip, we are also looking at the
01:43:58applications that are required. This is just one part of it. The other part I told is about
01:44:04the whole manufacturing also could be transformed because of the AI, and we can bring a lot of
01:44:10solutions that go into the manufacturing. There are a lot of processes in semiconductor
01:44:15manufacturing such as etching, polishing, lithography, and a whole lot of parameters,
01:44:21and it's a huge power consumption, huge opportunity for optimization. That's where
01:44:28data, AI, and cloud will play a larger role, and TCS would definitely be in the central part of
01:44:35playing that role. I don't know how much you can add to this,
01:44:42Mr. Ayaswamy, but from a future perspective, does this focus of TCS then become key?
01:44:50The company is already, of course, a leader on the software side, but the focus on semiconductors and
01:44:57internet of things and AI in the chip space, how big is this as a part of TCS's overall vision?
01:45:10Yes, as I said, in TCS, this semiconductor would come from different sources of opportunity and
01:45:21business for us. One is providing the R&D services and the chip design services,
01:45:27which we already have, and we will be expanding this multi-fold because I think
01:45:32today I also am responsible for the internet of things business division. We feel the proliferation
01:45:40of application-specific system on chip would be like expanding multi-fold. That will be a huge
01:45:48stream, and we will be expanding our headcount as well as our capabilities, tools, and the
01:45:54knowledge on this exponentially. Similarly, if you look at the downstream applications that are
01:46:02happening in the engineering and R&D industries across all these industry segments, like medical
01:46:09device and utilities as well as automotive, we will see tremendous growth opportunities there.
01:46:17Third is, not stopping there, we can also address the huge opportunity because in India itself,
01:46:23there is such a large investment in the semiconductor industry. Tata Group itself
01:46:29is making huge investments of close to 91,000 crores, and there are many other players also
01:46:35setting up those farms and factories here, and TCS will have a unique opportunity to work with
01:46:42them also to implement some of this solution, not just overseas but also here in India.
01:46:48All right, that's the view from TCS on multiple things that they are doing and the opportunities
01:46:55thereof. Now, we shift focus to a mid-sized name, Tega Industries. It's a mining equipment
01:47:00manufacturing company, aims to achieve revenue growth of 15% in FY25 and more going ahead.
01:47:07Samina and me caught up with the Managing Director and Group CEO, Mehul Mohankar,
01:47:10talking about the growth plans and the road ahead for the company.
01:47:13Listen in as we wrap up this edition of India Market Open.
01:47:17What Tega does is what we call manufacturing and designing of products which are called
01:47:23critical to operate consumables in the mining space. For customers, we are an OPEX spend,
01:47:30so hence we are quite devoid from CAPEX cycles in the commodity cycles. And all of Tega's products
01:47:37are installed in what we call a mineral process plant in a mine, and we aid in extraction of metal
01:47:44from the rock once it's excavated from the mine. So, that's what our business is. We try and define
01:47:52it as all above ground operations. So, we're not in the excavation of rock from the earth,
01:47:57but processing of the rock to extract metals from the rock.
01:48:01So, fair assumption that with everything that's happening in your sector or in the metals and
01:48:07mining and commodity space, you're rather insulated from it because it really doesn't
01:48:11matter if commodity prices are moving up or down.
01:48:14Yeah, absolutely. So, the best way I kind of position our business is that if you want to,
01:48:19as an investor, ride the commodity cycle without the risks of the CAPEX side of it, we are the
01:48:25best company in that spot because we have an OPEX-related business.
01:48:30So, you're an Indian company with Indian roots,
01:48:35but India is not the largest mining country in the world. You've got Latin America, you've got Africa,
01:48:41explain this to me, right? So, you're based here, but you're servicing, and I'm assuming
01:48:45you're servicing countries far out. How does that dynamic work and where does the experience come from?
01:48:51So, in the truest sense, we're an Indian-born MNC. So, we have manufacturing locations in
01:48:58South America, in Chile, in South Africa, Australia, and about seven manufacturing plants in India.
01:49:03And the reason for that is we try and always be closest to our customers that we serve
01:49:08because, as I said, it's a critical-to-operate product. So, customers have huge expenses and
01:49:12liabilities if there is downtime on the equipment. So, it's imperative that we are close to them,
01:49:18and that's why we ensure that we are as close to the customer as possible when it comes to
01:49:25serving them. So, our ethos is about 48 hours from a phone call, we would like to be at a customer's
01:49:30site. Now, in India, the mining industry has not been growing as rapidly as it has across the
01:49:36world. So, in India, I think our contribution of mining is less than 2% of our GDP. And markets
01:49:43overseas, because of the size of the plants, tend to be way larger than we have in India. And hence,
01:49:48the demand for our products has always been and will be much higher outside of India.
01:49:52Hence, our revenue mix is such, and it reflects that, that 85% of our revenue is exported,
01:49:58is non-India-centric. But these are very unstable economies and dangerous in some ways. Is that,
01:50:02I mean, relative to India, of course, I mean, Latin America, Africa, do you hedge yourself?
01:50:07And also, this landscape is evolving, right? You'd imagine this competition coming in,
01:50:12you might have geographical biases. Is that a risk to the outlook of Tegra for the next two to three
01:50:18years? Well, one can always be faced with geopolitical risks. Mining countries or
01:50:25commodity-led countries tend to be a bit more riskier than the others. But then we have been
01:50:32in the business where we've been able to de-risk ourselves from a geography perspective. So today,
01:50:36as I said, we have manufacturing bases across the world. We ship to 96 countries today globally. So
01:50:42that itself is a diversification of our portfolio from a risk perspective. Coupled with that,
01:50:47we have multiple product lines which serve customers across metals across the world.
01:50:53Geopolitical issues will always be there in our business, but we've been around for such a long
01:50:58time that we've been able to plan and circumvent them over our existence so far. So I think that's
01:51:04how we look at it. What about the fact that China seems to be slowing down at a much more rapid
01:51:12pace than what people would have thought at the start of the year? Does that have an impact on
01:51:19the mining ops of companies which might be owning some of these mines? Because if the end product
01:51:24prices are going down, if the fortunes, as they say, are changing, do they go slow on the OPEX as
01:51:30well or not quite? So China is a big market for mining, but we've intentionally stayed away from
01:51:37China because I've always believed that China is a one-time supply market. And we have a lot of
01:51:43inherent IP in our product, which I would not want it exposed in an economy which we cannot protect
01:51:50our IP in. So we've always looked at growth for ourselves outside of China. And today there are
01:51:57Chinese companies who are operating in our space, but they're at a much, much lower value-add
01:52:04segment. So they're in a segment which we've already exited about a decade ago. So I think
01:52:10China for us is not that big of a factor. We've not always looked at China as being competition
01:52:17or a market that we would want to be in. But China has been leading a lot of growth and
01:52:21investments in the mining industry. So they do own a lot of resources and assets globally. And
01:52:27one cannot ignore them, but we would find a way of how we can still coexist with Chinese vendors.
01:52:34Okay. So you had a fairly decent quarter one, and I'm using that as a cue to just try and understand
01:52:41what you likely think of how growth can be over the course of the next, let's say,
01:52:47three years. Or I don't know if it is possible to think of five years in such a volatile world. But
01:52:51I'm guessing while you talk about quarters at the end of every quarter, what is the larger vision,
01:52:55let's say, three-year, five-year game plan, if you will? So if you look at our past seven-year
01:53:01history, we've been growing at a CAGR of about 20-odd percent. And for the last three years,
01:53:05we've been guiding the market at about 15% CAGR. Of course, in the last seven years, our base has
01:53:11moved up as well. So today we're roughly at about 1,500 odd crores at FY24 revenue numbers.
01:53:18And the intention is to continuously bring to the market new products that can help us leverage our
01:53:26operating capacity and at the same time maintain our margins. So the trick is how do we continue
01:53:31to grow at 15% and above and still maintain our healthy 21%, 22% EBITDA that we've been
01:53:37demonstrating so far. But I firmly believe that we do have the product lines. We do have the
01:53:42strategy in place. McNelly is an equipment business that we bought to ensure that the
01:53:47growth momentum is sustainable. And we're quite confident that it will do so over time.
01:53:52You know, I want to talk about your product, because I think a product mix or launching
01:53:57new products, discovering new geographies is probably where your next leg of growth will
01:54:01come from. One product that I read about and heard your interview across was Dynaprime.
01:54:07Give me a sense of what is the sort of growth you're expecting for Dynaprime over the next
01:54:13two to three years? What is the contribution of Dynaprime currently to your books? I'm assuming
01:54:18again, low base, potential to grow is higher. Could this sort of help you scale and beat that 15%,
01:54:2417% growth that you're aiming for? So Dynaprime is a homegrown product line.
01:54:29We launched it in the market in 2018. And the intention of launching Dynaprime was to offer
01:54:35customers an option of using an alternate lining substrate other than steel liners.
01:54:41So in the grinding mill business, steel liners have been pretty much dominant over the past
01:54:47many, many decades for the lack of a better alternative. And in Tega, we were able to
01:54:53develop a product in-house from our own products tables that we could bring to the market
01:54:59with reasonable amount of credibility now and a huge reference base, which gives customers the
01:55:03confidence that there is a product that's available as a substitute. And the idea is to
01:55:08continue to push through with Dynaprime in the steel lining segments. So for example,
01:55:13we estimate the steel line market to be about $900 million. And we're just barely ex-China.
01:55:18What's your market share in that $900 million? We're just about scratching the surface. I think
01:55:22we're about anywhere between 3% or 4% as of now. So there's a huge upside and headroom for us.
01:55:27So in three to four years from now, where do you see that market share stand? And what are margins
01:55:32here? Do you enjoy better margins because it's an in-house product? So margins are similar as our
01:55:36existing product profile. But right now, we're still in the seeding phase. We're still in
01:55:41establishing the product in the market. There's enough traction. But the idea is to get all the
01:55:46trials done first and then be able to improve on the pricing. So once the customers have experienced
01:55:53the product, have benefited from all the KPIs that we've been talking to them about and assuring
01:55:59them of, then there's an opportunity to put the price up and have better margins from that product
01:56:04vis-a-vis other product lines. But Dynaprime is a product that we think is a product of the future.
01:56:11It is something that I think customers are going to greatly benefit from and is going to be
01:56:16a pretty new innovation in the market where we are cannibalizing the steel liners.
01:56:21And what happens, I mean, in order to get this growth numbers that you've spoken about,
01:56:25we've not even reached the inorganic side. But do you need to expand the product portfolio
01:56:29meaningfully or with the current set of products, Dynaprime and others,
01:56:32you reckon that this growth number is eminently possible?
01:56:36At any given time, we have over 8 to 10 products which are in our R&D stables. So we have a big
01:56:40push towards the digital space of using IoT sensors in our product because I get more and
01:56:45more customers telling me that I need to de-risk my operation. And one of the ways to do that is
01:56:50to be able to have advanced warning systems which tell them that it's an engineer product, right?
01:56:54So it has its own inherent issues of maybe there could be an issue with the product or with the
01:56:59plant. And how do we ensure that the customer knows about it in advance and can plan for it?
01:57:04So you have sensors in it which talks to the customer and can forewarn them if something
01:57:09is not right. So that's a big digital push that we're working on. Again, because I said it's a
01:57:14critical equipment that we supply our product to. And these are the initiatives that we're
01:57:18working on which will ensure that our growth rates and margins remain sustainable as we continue to
01:57:23forge ahead.
02:01:24Thanks so much for tuning in to Talking Point. I'm your host, Neeraj Shah. The case for a chat
02:01:29with our guest today, has the large cap pivot begun already? Would the festive cheer aid
02:01:37consumption, which certainly needs a bit of a kicker? And would the pharma focus in India
02:01:43continue considering a slew of developments that have happened already within that space,
02:01:49already within that space, including the biosecure act in the US and more? Let's talk
02:01:54about all of this and more with our guest, Ashish Gupta of Axis AMC, joins us right now on the show.
02:01:59Ashish, great having you. Thanks for taking the time out. Neeraj here, I hope all is well.
02:02:03Yes. Hi, Neeraj. Thanks for having me.
02:02:05The pleasure is entirely ours. Ashish, I'm asking a bit of a here and now question and
02:02:10then we move on to the longer term picture. But this sudden spurt of momentum that India got
02:02:14yesterday, and maybe some of the other markets too, is this preempting some rate easing cycles
02:02:22ahead of them actually happening? Or are there other technical reasons for the same?
02:02:28I think my personal belief is that, yes, definitely the outlook of the market because of
02:02:37the expected rate cut is positive. But what we saw yesterday and particularly in the last couple
02:02:43of hours of trading is more to do with the interlinkages the cash market has with the
02:02:50derivatives market. And we have spoken about this earlier that the frenzy that is there on
02:03:01index options around expiry date in particular can drive volatility in the market. So I think
02:03:08we have to be careful about that and not read too much into the volatility that happens in the last
02:03:14couple of hours, particularly on expiry dates. Got it. Okay. The near term reasons not
02:03:23withstanding, Ashish, the fact remains that we are a market which on certain counts of valuation
02:03:30could be considered expensive. Though the bulls tell me that, Neeraj, look at the 10-year
02:03:36valuations, look at the growth that we are putting in. Why are we so egregiously expensive? We are
02:03:41not. So I would love to understand from you, Ashish, how do you think of the valuations in
02:03:45the current context? Sure. So I think there's no dispute that if we look at valuation from a
02:03:53simplistic lens of just, let's say, a PE multiple. So if we look at the large cap indices, they are
02:04:00trading at about 21, 22 times earnings. The historic average has been around 16 times. So
02:04:07on that count, it is expensive. I think the other important statistic to note there is that if we
02:04:15look at the broader market, if we look at the mid-cap and small-cap indices, there the multiples
02:04:21are even higher at about 27, 28 times. The good thing, and where I will agree with the bulls,
02:04:28is that these high multiples have been well-supported by earnings over the past three
02:04:34years in particular. So both in absolute terms as well as relative to what we are seeing in
02:04:41international markets, we have had a 23%, 24% earnings stagger over the past three years.
02:04:49I think what we need to be careful about is that what is going to be the earnings growth going
02:04:56forward. And if you see the recently reported June quarter earnings, the earnings growth had
02:05:03moderated to about 8%. And if I look at consensus forecast earnings for FY25, that is averaging at
02:05:12about 13% to 14%. So I think that is why it's careful to kind of take these multiples into
02:05:22cognizant that the earnings growth is also slowing. And with the slowing earnings growth,
02:05:29one should not expect multiples to keep expanding. And if that does not happen,
02:05:34it certainly means that market returns will be more moderate this year compared to what we have
02:05:40seen in the last couple of years, notwithstanding the fact that global rates are easing.
02:05:47Got it. Okay. Just wondering, Ashish, the first quarter aberration,
02:05:56I mean, it may spoil the picture, yes, for FY25. But I mean, most companies have said that
02:06:03the election-related issues that happen in quarter one will get over. So does that spoil the party
02:06:10quite significantly from an earnings outlook perspective?
02:06:14Yeah. So I think you're right. First quarter was a bit of an aberration. And therefore,
02:06:21it was only about 8%. But even if I look at FY25, and even the forecast growth for FY26,
02:06:29that is broadly around 15% only. And actually, in the mid-cap and small-cap,
02:06:39a relatively faster growth is expected in those pockets of the market. Because if you see the
02:06:46large caps, they are dominated by companies in the IT services sector, a few conglomerates,
02:06:54the banking sector, FMCG. And these companies actually are not growing that fast. The banking
02:07:03sector, we know, has seen some slowdown in loan growth. Margins have also peaked. So the fact is
02:07:11that in the last three years, we were coming off a very low base of earnings. And from this high
02:07:18base of earnings and profitability, the growth in bottom line will be more correlated to the
02:07:25top line growth that India is witnessing. So if the nominal GDP growth is going to be
02:07:31about 10-11%, then I think a 15% corporate profitability growth is reasonable to expect.
02:07:42Okay. Now, viewers, I want to draw your attention to this chart. It also assumes
02:07:47some significance simply because on the back of a note that Ashish had written some time back,
02:07:53when he spoke about the kind of flows that have happened, and the kind of selling that has
02:07:57happened as well from the promoter entities too. But this is an ISEC research note of a recent note,
02:08:03and it's based on data of top 1000 stocks by market cap and clearly shows that the flows
02:08:10from the MF side have been bordering majorly on the large cap end versus the mid caps and small
02:08:15caps. Not quite so much for FPIs wherein there are outflows until recently on the large cap end.
02:08:21And then this crux here, right, promoter entities, other foreign investors, all have sold
02:08:26out of large, mid and small. Ashish, I would love to understand from the time that you first
02:08:32wrote that piece in a much more broader fashion, of course, but until now, does that give you a
02:08:39sense of things being different going ahead? Could large caps now be the central focus?
02:08:49If indeed global flows were to strengthen and let's say the market stays stable or marginal
02:08:55correction as well, could SMIDS correct or relatively underperform the large caps going ahead?
02:09:02So I think technically where the market is positioned and actually rightly highlighted
02:09:09that mutual fund flows on the large cap side have picked up and you have had relatively
02:09:15more stable flows on the mid and small cap side. But I think really one big challenge
02:09:24which I referred to earlier is that the large cap earnings growth has been relatively lackluster.
02:09:31And so I think unless there's a huge disappointment in mid and small cap earnings,
02:09:39I think there will be attractive pockets of opportunity in that space.
02:09:46It, of course, comes with a fairly high risk because earnings expectations are high
02:09:52and which is reflected in the multiple. So we spoke about the fact that
02:09:56companies are trading on average in that space at about 27, 28 times. In fact, we had done another
02:10:03analysis that companies where earnings growth expectation is more than 20%, the average PE
02:10:11multiple is nearly 34 times. So if the company disappoints in earnings today because earnings
02:10:19growth is forecasted to be more than 20%, it's trading at more than 30 times. And if
02:10:27for whatever reason there's a miss in earnings or cut in earnings forecast, say 20% comes to
02:10:3410 or 15%, you will see a double whammy, not just the EPS being cut, but the multiple will drop from
02:10:4330 plus time to around 20 times. So I think that's where we need to be careful in the
02:10:49mid and small cap space. So one has to be much more focused on companies where you
02:10:58have the belief that earnings growth is going to be there and it is going to be there for the
02:11:04medium term. Point well noted. Where is it? Okay, so where do you believe the largest pools of
02:11:11profit exist, Ashish, let's say over the next three years, because in some pockets, like you
02:11:17also probably partly referred to and correct me if I'm wrong, that maybe in some pockets valuations
02:11:21may be expensive, but profit pools may be very, very large over the next three to five years,
02:11:25and therefore maybe a promise a better promise of earnings growth. So where do you think the
02:11:29largest pools of profit exist? And where within the pools of profit relative to the existing
02:11:35valuations? Is there the largest degree of comfort for a large investor like you?
02:11:41So actually, to be frank, the market does not really have too many undiscovered pockets,
02:11:48right? We have had like seven, eight years of consistently positive return. So there is
02:11:56very few undiscovered pockets. I think the good news is that the market earnings
02:12:06and profit pools have become very broad based, right? So if we kind of go back
02:12:13five, seven years ago, the profit pools were primarily sitting in a couple of areas,
02:12:20say the consumer sector, the retail space, or really the financial sector. And this has
02:12:28gotten broad based over the past four years. So today, you see various parts of the economy,
02:12:36whether it is investment related, manufacturing related, even pockets like real estate,
02:12:47besides consumer and financial. So the profits are very well distributed. And literally,
02:12:57every segment of the market is today in terms of profitability. And now,
02:13:02I'm not saying earnings growth, but at least in terms of profitability,
02:13:09near to its peak in its earning cycle. So I think that is the good news. I think
02:13:16what we need to focus on teams that will be long lasting, given the multiples that are there.
02:13:24One thing that we have done incrementally more positive on is consumption. Because over the past
02:13:32three years, because of the relatively slow recovery post COVID in that space, and the fact
02:13:40that other pockets of the market had come back from very low profitability, this part of the
02:13:47market had got relatively ignored. I'm not saying that there was a distressed valuation,
02:13:55but had relatively underperformed. And here, we are seeing a couple of opportunities. One,
02:14:01that there has been a cyclical pickup in mass consumption. So some early signs are visible.
02:14:08So you would have heard the commentary now that for many companies,
02:14:13rural consumption is outpacing urban consumption. You are seeing some segments now like two
02:14:20villas consistently doing well. And in fact, now two villa sales are outpacing the growth in
02:14:27passenger vehicle sales. And the second big important driver in this space is really the
02:14:35benefit of increasing penetration and changing consumption patterns. So you look at segments
02:14:44like retailing, you look at what is being consumed, so the consumption basket, how it is changing for
02:14:51people, and even how these goods and services are being consumed. So that has been a big driver of
02:15:03growth. And I think that presents attractive opportunities that will be a long lasting.
02:15:11So I think that is one segment we are incrementally more positive on.
02:15:15Okay, sorry, can I just ask for some detail there? So two subsets of my next question, Ashish.
02:15:21One of them is, you know, this uptick that we've seen in rural growth. And some people say, oh,
02:15:27don't classify urban rural because most of urban companies also have a rural presence and vice
02:15:31versa. So I don't know if you bifurcate that. So that's part one of my question. Part two of my
02:15:36question is what you just mentioned, that there are some interesting consumption trends emerging,
02:15:41which could be long lasting. Now, is this only present in retail or are they present in other
02:15:45forms of consumption? I would love to pick your brains on that.
02:15:49Frankly, it is present in every form of consumption, right? So, for example, if you
02:15:55look at the four wheeler sector, particularly, right, so we had five, six years ago that the
02:16:04four wheeler being dominated by compact car sales, right? So 60% plus two thirds of the sale
02:16:12used to be compact cars. Today, if you see four wheeler sales, more than 60% is SUVs.
02:16:19So companies that got that shift right have seen a multifold increase in their stock prices
02:16:29compared to relatively companies that are still more focused on the compact car segment.
02:16:35So I think this is present in virtually every segment of consumption and not just say a
02:16:45a few pockets of it. And tell me that I forgot your first question.
02:16:50My first question was on the basic aspect of rural growth, because data seems to suggest
02:16:56that rural is picking up. So is that data applicable for trying to make a decision on
02:17:02FMCG or staple names or not really? I think it definitely is. And again,
02:17:12with FMCG, again, we have to be careful about what are the changing consumption patterns,
02:17:20because for many companies, it's actually not just about the cyclical slowdown that had happened,
02:17:28but it is also about what are the goods and services and how they are being consumed today.
02:17:36So today, you have seen the growth of D2C brand in many categories coming in, and that's actually
02:17:46taken the shine away from companies that just relied on their distribution network, for example.
02:17:53So you are actually seeing differential growth rates in segments where D2C brands are meaningful
02:18:03versus in segment where there are no D2C brand. So FMCG companies in pocket where there's no D2C
02:18:10brand, you have seen consistently better volume growth. So I think we have to be careful in
02:18:18classifying every slowdown as just being because of cyclical reason, because there are enough
02:18:24changing patterns that are driving consumption as well. Got it. Okay. So just one last question
02:18:35on consumption, Ashish, and that is, until about six months ago, the theme most favoured was
02:18:44the beneficiaries of the K-shaped consumption, and particularly at the premium urban end, right,
02:18:51because those opportunities were cited to be multi-year, maybe decadal opportunities
02:18:57as India's per capita income grows. I'm just trying to understand, there may be a slowdown
02:19:03currently or maybe out of fashion to talk about them currently, but are these indeed decadal
02:19:09opportunities? And would you be interested in investing in some of these? And if so,
02:19:14what are these? I mean, are they falling under indirect forms of urban consumption
02:19:22or are there direct good manufacturers? Any insights here?
02:19:27I think I still believe that those opportunities are there and I still believe that they are
02:19:33decadal. And even as you are seeing some slowdown in urban consumption in these pocket growth
02:19:43continues to be fairly strong. One segment, and I know it might not be typically seen as
02:19:52consumption, but I even see real estate as a big beneficiary of this trend, right? And we believe
02:20:02that we are on a strong real estate cycle and you will continue to see growth come in.
02:20:14I think one of the reasons why market has kind of lost some of the focus on this probably is that
02:20:23the valuation overall had moved up more materially in this segment. And
02:20:30there is a catch up as broader consumption is picking up. But I think the uptrend in
02:20:37the top end and the premiumization trend that we are seeing is certainly here to stay.
02:20:44Okay. Ashish, now I'm moving tracks and trying to understand if tech and IT services becomes a part.
02:20:56And the reason I ask this amongst everything else is that the last seven or eight days,
02:21:01a clutch of sell-side brokerage houses have come out and said that they are now starting to turn
02:21:08constructive on IT services at the margin. Maybe even BFSI is picking up. November uncertainty on
02:21:14the US is probably a couple of months out. Was there at least we know which direction it is
02:21:18and therefore that event is out of the way as well. Are you constructive IT services? Yes or
02:21:25no? And why or why not? So, we are actually still relatively underweight IT services.
02:21:34Okay. So, we believe that, yes, there is some visibility in terms of bottoming out of earnings
02:21:42and earnings growth. Given the fact that there are late cuts, there is commentary particularly in
02:21:50BFSI sector, global BFSI companies, that their IT spending is actually going to go up and there's
02:21:59been some pent-up demand there. But even putting all that in, we really struggle to see most of
02:22:09the IT companies being able to deliver double-digit earnings growth. If I look at multiple IT services
02:22:16companies, so despite the fact that many of them had underperformed, the multiples for IT
02:22:26companies were still about one and a half standard deviation higher than their historic trading
02:22:32multiple. So, I think that has kept us to form towards IT services companies. Within the sector,
02:22:41we believe, again, there are some companies that have better earnings potential that are
02:22:50focused in a few verticals or products that are doing better. So, we are overweight those,
02:22:58but on a sectoral basis, we continue to be underweight IT services.
02:23:04The same applies to ER&D and other forms of tech businesses as well, or is it only IT services?
02:23:11I think ER&D certainly has much stronger growth outlook. I think companies
02:23:19have consistently delivered better growth and outlook is certainly
02:23:25better there than, I think, the larger cap IT services.
02:23:30Okay. So, ER&D better, but IT services itself, Axis AMC is not that constructive on. Ashish,
02:23:37one more follow-up really to an earlier answer that you gave, last couple of questions.
02:23:43You mentioned about longer-term trends and how four-wheelers and SUVs in particular are coming
02:23:48to the fore, but we've seen, I'm trying to talk about the near-term now, that we've seen this
02:23:54dichotomy in sales between four-wheelers and two-wheelers. I mean, it's after a really long
02:24:01time, probably post-2019, that I'm seeing festive season discounts on offer in the four-wheeler
02:24:08companies. Now, are therefore four-wheelers a bit circumspect as an investment candidate,
02:24:14and conversely, could two-wheelers continue to do well? I'm just trying to think how you think about
02:24:19it. See, I believe the discounting cycle that we are seeing is really reflecting the inventory
02:24:27cycle. So, there was a big buildup in inventory on the four-wheelers space. Last quarter,
02:24:38the retail sales on the four-wheeler disappointed, and there was a big inventory buildup.
02:24:43And that's led to the discounting that has happened. I think once the inventory clears up,
02:24:51you will see the discounts also fade away. I think the interesting question,
02:24:58though, still remains that over the medium term between, I think, the two-wheelers and
02:25:05the four-wheeler space where one would be. I think we have positions across both the segments,
02:25:18and the way we are playing the auto sector is not really just looking at we want to be
02:25:24overweight two-wheelers or four-wheelers, but we are more focused on the companies
02:25:29within this space because there are clearly trends visible on which companies are gaining
02:25:35market share, which companies have a better product cycle that is coming through. And
02:25:41we believe that will really determine the output.
02:25:48Okay. Ashish, one last thing. Over the course of the next six months until Pitcher
02:25:56becomes clear, because I think it's becoming difficult to take maybe year-long, two-year
02:25:59calls, but over the course of the next six months or nine months, as far as visibility allows you,
02:26:05would you prefer, within the subset that you're investing in, would you prefer outward,
02:26:11global-facing businesses, or would you prefer India inward-looking businesses,
02:26:18considering that some of the Indian domestic-oriented businesses, maybe the valuations
02:26:24could be higher, defense slash railway slash others, and maybe some other pockets too. So,
02:26:29where is it that your preference lies and why?
02:26:32No, I think that part of the thought process is very clear that it will be inward-looking
02:26:37businesses. I think the best barometer to look at this is oil prices, right?
02:26:48Whatever we are seeing happening in terms of geopolitical events, and that has not really
02:26:56improved over the last few months. You still see the fact that oil prices continue to come down,
02:27:04and that's really reflecting what is happening to global demand.
02:27:10So, I think with the challenges China is facing and their economic growth outlook is not improving,
02:27:22even as there is expectation that US state cuts will come in and will help
02:27:29avoid a recession in the US, the outlook for global growth is really not great.
02:27:36So, I think our preference is that there is much greater visibility on domestic growth stories that
02:27:43we can have, and the risk-to-earnings here will certainly be lower.
02:27:51Okay. Lovely talking to you, Ashish Gupta. Thank you so much for taking the time out and being with
02:27:56us. Thank you. My pleasure.
02:27:58That's the view from Axis AMC, and with that, it's a wrap on this leg of Talking Point. Thanks
02:28:02so much for tuning in.
02:31:02Thank you.