- 2 years ago
- #TCS reports its Q2 results today
- Key market levels to keep an eye on
All this and more on #TradeTalk with Alex and Hiral. #BQLive
- Key market levels to keep an eye on
All this and more on #TradeTalk with Alex and Hiral. #BQLive
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NewsTranscript
00:00 Good morning and thanks so much for tuning in.
00:02 You are watching Trade Talk on BQ Prime.
00:04 My name is Alex Mathieu and with me is Hiral Dadia.
00:06 Good morning, Hiral.
00:07 Good morning, Alex.
00:08 Well, we have got quite the handover from overseas.
00:11 In fact, the US markets ended positive.
00:13 You have Asian markets that are trading positive as well on those cues and that's primarily
00:18 I think you can see on account of the decline in bond yields or rather the buying interest
00:23 in bonds that is pushing yields down and that's having a bearing on risk assets globally.
00:30 Absolutely.
00:31 And you see, you know, to include to that list, you have Europe as well bearing, you
00:36 saw stock 600, a close of almost 2%, I think, and this is the biggest gain that we've seen
00:41 since the November 2022 as well.
00:44 So across, Alex, yes, that positivity is there from a global market perspective.
00:49 If we sustain with that, it'll be a good move because yesterday's session as well, Nifty
00:54 a gain of almost 177 points is what we saw.
00:57 It's actually breached its 50 DMA.
00:59 And broad-based.
01:00 Absolutely.
01:01 And you have the PSU Bank Index, which has seen a good reversal, which has come to the
01:05 support of Bank Nifty in yesterday's session.
01:07 If that sustains, it's going to be interesting.
01:10 And you're talking of the ITPAC now because you have TCS, which reports numbers today,
01:14 Infosys which reports numbers tomorrow.
01:16 So clearly that will actually set the trend as well with regards to IT sector as a whole
01:21 go.
01:22 Absolutely.
01:23 And yesterday, I think one of the big talking points was the RealtyPAC, which ended with
01:27 gains of about 3.75%.
01:29 But at one point during the session, it was up over 4%.
01:33 In fact, it gained the most in as many as 15 years yesterday, or rather it hit a 15-year
01:39 high.
01:40 I must admit, it hit a 15-year high, it gained the most in over a year.
01:44 And that is on the back of quite a few very positive updates from a few mid-cap names,
01:50 the likes of Purvankara, for example, and we pointed that out on the program yesterday
01:54 as well, having reported sales of more than 100% growth over the same quarter last year.
02:02 And this is the business updates.
02:04 So that's clearly something that you would want to focus on.
02:06 There is a possibility that there is a fundamental uptrend building in the real estate space.
02:12 Absolutely.
02:13 And we will revisit the real estate space with Saloni as well to understand as to how
02:18 the quarter update has been as well as what's in store in the second half of FY24 basis.
02:24 But let's head across to Agam to understand now, what are the FNOQs pointing out to us?
02:29 Because clearly, you have the PSU Bank, which has come to the rescue yesterday.
02:33 Do you think it will continue in terms of today's session, which will help us move higher?
02:38 What are your data points indicating, Agam?
02:40 Right, so data points indicating a very sharp short covering.
02:44 And we must remember that while option premiums were very, very narrow, that's also led to
02:51 substantial spikes.
02:52 It was also the fin nifty expiry yesterday.
02:55 And we saw a considerable amount of spiking of both calls and put options in yesterday's
03:01 day of trade, which actually triggered a lot of stop losses for a lot of traders who were,
03:06 in fact, short options or short gamma, as they'd like to call it.
03:10 That said, the short covering has come through.
03:13 And we're looking at key levels, both the nifty and the bank nifty currently managing
03:19 to hold above key levels.
03:21 So we've seen unwinding coming along.
03:24 The nifty futures open interest down by around 2%.
03:27 So short covering there and bank nifty futures open interest also down by around nearly 11%
03:32 short covering seen there as well.
03:34 One of the levels we're watching out for as far as the nifty goes, currently, and of course,
03:39 this expiry is going to come through tomorrow.
03:42 But as far as the nifty is concerned, it is 19,600 considering we moved above that mark
03:48 and we've closed above that mark.
03:50 So not only did we see unwinding in the 19,600 calls, but we also saw an addition in the
03:57 open interest for the 19,600 puts, which means put writers have become active around 19,600.
04:06 Moving on to the bank nifty, today is that weekly expiry 44,500 remains a key level considering
04:13 we saw the bank nifty close above that mark.
04:17 And the real question is that where do we head from here?
04:21 And these are the levels that we are going to watch out for.
04:23 For now, 44,000 serves as a good support, so to speak.
04:29 But this is still a bit far off, given we're not expecting a 1% move in today's year of
04:34 trade.
04:35 So we could be not writing that off, but it's something that we're going to keep an eye
04:38 on.
04:39 But on the whole, short covering coming through, and consolidation continues on a relatively
04:43 longer span.
04:44 So 20,000 not on the cards immediately, right?
04:47 Not immediately, yes.
04:48 Okay.
04:49 All right.
04:50 So that remains the same.
04:51 Thanks so much, Agam, for bringing us those key details.
04:53 Now, we did mention TCS at the onset and the fact that it will determine the course of
05:01 the IT pack as a whole and provide the initial indicators of how the Quartus 2 has been for
05:06 these IT companies.
05:08 As things stand, of course, we have information about Accenture, and that is kind of muddying
05:13 the water.
05:14 So we don't know exactly what to expect.
05:15 But Tushar is joining in to give you some perspective as to the key points to bear in
05:19 mind in the numbers today.
05:20 Tushar, good morning.
05:22 And what are you looking forward to?
05:24 Good morning, Alex.
05:25 Good morning, Hill.
05:26 The five key things that we should look at TCS second quarter results today.
05:32 Keep in mind, whatever happens, it's a given that we are looking at a subdued or muted
05:38 quarter for TCS.
05:39 Okay, the five things that we have to keep in mind is the first, the big numbers, the
05:44 top line, the bottom line, the revenue will grow less than 1% sequentially, the profit
05:50 may rise by around 3% sequentially.
05:53 But investors will be more keen on looking at cues at what the management say as far
05:58 as how the rest of the fiscal will pan out.
06:00 And as like you mentioned, Accenture has already muddied the waters.
06:03 So we are looking at a painful FY25 as well, at least the beginning.
06:07 We're also looking at deal making.
06:09 TCS signed some mega deals in the past quarter.
06:12 There was a deal with JLR, there was a deal with UK's NEST pension scheme.
06:17 Okay, the big deals are still coming in.
06:18 But the big question is especially spending.
06:21 Is it coming in?
06:22 Because the big deals have come with a longer period of time, come over a longer period
06:27 of time, the negotiation deals are shorter, those snap returns are still not coming in.
06:32 TCS wants its employees more than 600,000 people to return to office immediately.
06:39 That signals an end to work from home, while that will store up your utilization level
06:44 and also add to overhead costs.
06:47 Next point to consider is the hiring plans.
06:49 TCS was the only among the top tier IT firms, TCS was the only net hire in the first quarter
06:55 with 550 people hired, net hiring.
07:01 The numbers will not be much higher in the second quarter, because TCS will look to make
07:06 the most of its bench, bench that has built over the pandemic.
07:10 The last point, which is the most important point, if I may say so, is the buyback that
07:14 is going to happen.
07:15 TCS in March 2022 did a buyback of Rs. 18,000 crore.
07:19 It has now the legroom to do up to Rs. 22,000 crore.
07:23 Now it remains to be seen how much the management is ready to stretch.
07:27 Alex.
07:28 Right.
07:29 Thanks Tushar for getting us the details.
07:30 It's going to be interesting to watch out for in terms of TCS.
07:33 And overall, if you talk about the IT pack as a whole as well, the key commentary that
07:38 I've been picking up so far is that let's not look at FI24 now, it's time to look at
07:43 the FI25, where FI24 will be muted, but there will be some bit of progress that could come
07:48 in in terms of FI25 as well.
07:50 So it's going to be interesting.
07:51 And it's mainly the BFSI sector that is going to be under pressure.
07:55 Though IT companies which have been catering to the auto space, they are expected to see
08:00 a good pickup from a demand perspective.
08:03 So let's see how all of this pans out.
08:05 But apart from a TCS, we will be watching out for smaller names like Delta Corp, Sami
08:11 Hotels, Signature Global, Zaggle, Prepaid Ocean as well.
08:15 All of these companies that will be reporting numbers in today's session.
08:18 So it's going to be an interesting day of trade to start off with in terms of the earnings
08:22 season.
08:23 But moving on from there on, a lot of other stocks that continue to remain in focus.
08:28 In fact, real estate as a pack has been in focus, as Alex was mentioning at the start
08:34 of the show as well.
08:35 Clearly, it's the Q2 update that has been interesting.
08:40 Industry with regards to what is in store in the second half of FY24 is also apparently
08:46 very crucial.
08:47 In fact, when I spoke to the management of Ajmera Realty yesterday, they clearly indicated
08:51 that yes, the demand supply is absolutely intact.
08:53 In fact, builders are of the opinion that let's not take price hikes because that's
08:58 something which is overing really well from a sales perspective.
09:02 Let's head across to Saloni, who has all the number crunching in terms of what the sector
09:07 has in store to give us more.
09:10 Saloni, good morning.
09:11 What do you have for us?
09:12 Good morning, everyone.
09:13 I'm Saloni from the Fy24.
09:14 I'm here to give you some operational updates from multiple companies for the second quarter
09:22 of FY24.
09:23 The gains were led by multiple players with a few hitting 52-week highs on reporting highest
09:30 ever quarterly sales numbers.
09:32 One of the stocks that stood out in trade today was Prestige Estates, which rose more
09:35 than 10%.
09:37 The company reported its highest ever sales of over Rs 11,000 crore during the first half
09:41 of FY24.
09:42 Its quarterly sales also more than doubled to over Rs 7,000 crore.
09:47 Shoba also added to the list of gainers in the Realty pack.
09:50 The stock witnessed a jump of over 6%.
09:53 Other property stocks such as Code Rich Properties, DLF, Oberoi Realty also jumped significantly
09:58 on healthy business updates.
10:00 The Realty Index remains to be among the top-performing indexes this year as analysts remain bullish
10:05 on the sector.
10:06 They expect the sales momentum to continue for the major developers and not just only
10:10 for this year but also for the next 2-3 years.
10:13 There are also expectations of improvement to be seen in pre-sales numbers across the
10:17 key players.
10:18 The industry data also seems to suggest that the momentum in sales and launches have been
10:22 healthy which is leading to a strong guidance by the companies.
10:25 Stay tuned to BQ Prime for more.
10:27 Now, let's focus in on a couple of other stocks.
10:46 MCX has been in the news for the last couple of weeks on and off because on the one hand
10:52 it announced the launch of its commodities derivative platform only to be stopped short
10:57 by the Securities and Exchange Board of India and then finally the green light has come
11:01 through and they have announced the date for when they will start this platform.
11:05 We've got Saloni joining in to give you some perspective on what this means for the company.
11:09 Morning Saloni, what do you have for us?
11:10 Good morning.
11:11 So, as you rightly said, MCX is one stock that has been on the news and it has risen
11:16 over 7.3% in the past one week itself.
11:19 It's on the back of the news that it will go live with the new commodity derivatives
11:23 platform on October 16th, that is days after SEBI gave its approval.
11:27 Previously, on 29th September, SEBI had asked MCX to delay the launch of the platform which
11:33 was scheduled to go live by October 3rd initially.
11:37 Then on October 8th, SEBI obviously withdrew its abeyance order.
11:41 The exchange has also planned to conduct mock trading on October 15th in order to allow
11:45 members to participate and validate setup and connection during the mock trading session.
11:50 The company has also informed all of its members that all of the pending orders at the end
11:54 of October 13th will be cancelled due to the release of the new platform.
11:58 And shares of MCX closed 1% higher at 2098.7 apiece yesterday.
12:05 That was ahead of the announcement.
12:07 Right.
12:08 So, all of these will remain, I mean MCX will be in focus.
12:10 And it's been a volatile right, but it's still in the positive if you have to take the performance
12:16 over the last couple of trading sessions and with the date coming out, probably it will
12:19 be one of the candidates that could see a positive move in today's session.
12:22 Thanks Saloni for getting us the details.
12:26 Moving from MCX, a couple of other names that are in focus, but one stock that Mika is going
12:31 to highlight for us is the JK Tire.
12:34 It's interesting to see how tire makers have been progressing.
12:37 And with the auto sales numbers that have been on the rise as well, as we know it is
12:42 one of the key beneficiaries, though it is a sector which gets impacted with higher crude
12:47 prices as well.
12:49 So a lot of things brewing there.
12:51 However, you've got one coverage that has been initiated and a good target price on
12:56 the counter.
12:57 Mika has the details for us.
12:58 Mika, what do you have for us in terms of JK?
13:00 Yeah, good morning.
13:01 So, MK has re-initiated its coverage on JK Tires with a buy rating at a target price
13:06 of Rs. 415, which is a 55% upside.
13:10 The brokerage believes that the stock's price can potentially double over the next three
13:14 years and estimates an 8% revenue and 58% profit after tax scan go over FY23 to FY26.
13:22 It also states that sizable deleveraging on behalf of the company can boost its FY26 return
13:27 on capital employed to 21% and converge JK Tire's valuations towards the large peers.
13:33 Now, the tire industry has been structurally improving on the back of track.
13:38 Truck, bus and passenger car radials imports decreasing with over 80% drop since FY20.
13:45 Furthermore, export competitiveness in India has risen due to the labor cost advantages.
13:50 And the industry has seen control capex, mostly in the form of ground field expansions.
13:56 Now, MK expects a stable to positive medium-term growth for the industry and a 7% volume cargo
14:02 till FY26.
14:03 Amid the structural changes, JK Tire has been outperforming its peers over the past
14:07 12 months, while it's underperformed by 20% during the span of FY20.
14:14 And MK believes that this outperformance is set to continue, driven by the company's efforts
14:19 to win high-growth, high-margin segments like PCR, SUV tires and exports.
14:25 This sustenance will be driven by research and development.
14:28 The firm has overcome the gap against its peers with multiple initiative launches.
14:33 Furthermore, the company has also expanded its distribution over 60% since FY18 and reviewed
14:40 its marketing spends towards branding rather than short-term promotions.
14:44 Okay, I was just looking at the share performance in the year-to-date period for the likes of
14:50 MRF, the likes of JK Tire and SEAT.
14:53 JK Tire, as you pointed out, has beaten its peers quite handily, growing over 40% in that
14:58 timeframe.
14:59 SEAT, by the way, is also an outperformer, gaining about 27%.
15:03 But let's focus on a couple more stocks.
15:05 And this is on the back of business updates.
15:07 We've got NCL as well as UGRO.
15:11 Yes.
15:12 So, UGRO Capital has reported their business performance details for Q2.
15:16 Assets under management have grown 73% YOY and 12% quarter-on-quarter and now stand at
15:22 Rs.590 crores.
15:23 The gross loans originated during this quarter was up 50% EUR/NW and now stand at Rs.2500
15:30 crores.
15:31 Unsecured prime loans constitute the largest portion of the asset under management portfolio
15:36 at 31% vs. 29% a year ago, while supply chain financing accounted for the highest proportion
15:48 of gross loans originated this quarter, standing at 45% vs. 37% a year ago.
15:53 The company's total debt this quarter also stood at Rs.3800 crores and is up 13.7% quarter-on-quarter.
16:01 Simultaneously, number of active lenders in the book stands at 62% vs. 60% last quarter.
16:06 The company has a target of 50% off-book AUM and has achieved 45% this quarter vs. 43%
16:13 last quarter.
16:15 The stock is down 9% this month but up 80% YTD and according to Bloomberg, all the three
16:20 analysts tracking the stock recommend a buy call and have a 31% 12-month return potential.
16:26 Next we have NCL Industries.
16:29 They have come out with their production and dispatch details for Q2.
16:33 Cement production is up 9% EUR/NW at 6,59,300 MT, while cement board production is up 12%
16:41 EUR/NW at 21,509 MT.
16:45 Cement dispatch is up 11% EUR/NW at 6,69,587 MT, while cement board dispatch is up 9% EUR/NW
16:55 at 20,239 MT.
16:58 Dough production and sales are up 23% EUR/NW.
17:02 And RNC production and sales are up 50% EUR/NW.
17:06 The stock performance is down 4.8% this past month but up 23% YTD.
17:12 And according to Bloomberg, the only one analyst tracking the stock maintains a buy call and
17:17 estimates a 35.5% return potential.
17:20 So these are interesting names we will be watching out for as well in terms of the cement
17:26 player as well as UGRO Capital.
17:28 Thanks Mika for getting us the details so far.
17:31 But moving on, a lot of other names that continue to remain in focus, Alex, in today's session,
17:36 which are names that have been picked by Varsha this morning.
17:40 Varsha, good morning.
17:41 What do you have for us?
17:42 Good morning.
17:43 So let's see the stocks which are in focus today.
17:44 First, we have Birla Corporation, where company is facing 8.42 crore penalty for excess limestone
17:51 production in Madhya Pradesh in the period 2001-2007.
17:55 Now company did not obtain environmental clearance during that period due to the ambiguity present
18:00 in the provisions of EIA.
18:01 But it did maintain valid consent to operate its mine from the State Pollution Control
18:07 Board.
18:08 Now, after receiving the order from the officer of collector, Birla Corporation has initiated
18:12 a review of the situation and the company is evaluating its next steps in response to
18:16 this development.
18:17 Then we have Thermax.
18:18 Now, there was a matter of arbitration between Thermax and a customer.
18:23 So on 6th June 2023, Thermax was directed to repair and reinstate two gas turbo generators
18:29 at customer's plant.
18:30 Now, company had filed an appeal before the High Court against the award passed by the
18:35 arbitral tribunal.
18:36 Now, in this regard, the stay of operation and execution of the arbitral award has been
18:41 granted, subject to company depositing an amount of 218 crores, which is written with
18:48 interest.
18:49 Now, what is arbitral award?
18:51 It is award granted by arbitrator in the decision where the award can be money one party has
18:57 to pay to other or it can be non-financial award such as stopping certain business practices.
19:03 Then we have Apollo Microsystems where trading approval of 6,66,000 equity shares, which
19:08 was issued and allotted on preferential issue basis to the non-promoters.
19:13 They have been granted by NSE and BSE.
19:16 So these equity shares are listed and admitted to dealings on the exchange from October 11.
19:21 Lastly, we have Crompton Greaves Consumer Electricals where the company has launched
19:25 a new product in the storage water heater segment.
19:28 Now, the good thing about this company is they are focusing on premium products which
19:34 will aid their margins going forward.
19:36 Interesting.
19:37 Thanks so much, Varsha, for bringing us those updates.
19:40 You know another industry that is seeing significant premiumization is the alcohol industry and
19:46 that industry of course is in focus during the World Cup in particular because of the
19:51 event that it is.
19:52 The kind of consumption that they are expected to see.
19:55 So I think all eyes are on the Radical Ketan.
19:57 In fact, you spoke with the management as well.
20:00 And that interview plays out, which is why I was bringing it up.
20:03 That interview plays out at 11 p.m. today.
20:06 Sorry.
20:07 See, I'm already thinking about the weekend.
20:11 But 11 a.m. today and you can catch that on the platform BQprime.com or in fact on any
20:17 one of our social media platforms.
20:19 But we're completely out of time on this edition of Trade Talk.
20:22 Thanks so much for tuning in and do stay tuned.
20:25 Lots more coming up over the course of the day.
20:27 This is BQprime.
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