- 4 months ago
Despite recent concerns around tariffs announced by US President Donald Trump in April, experts remain positive on the IT sector’s future.
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00:00Good morning and welcome to market opening on our brand new collab show between Business Today and India Today TV.
00:06It's 9am and we're here to get you ahead of the curve as markets kick off trading for the day.
00:11Let's take a look at what's hot in the corporate and financial space this morning.
00:15Oracle signs a mega $300 billion cloud computing deal with OpenAI.
00:21Stock zooms 36% overnight.
00:23Larry Ellison's 41% stake in the company makes him $90 billion richer in a single day.
00:30Bloomberg puts his wealth just $1 billion short of the world's richest man, Elon Musk.
00:39Apple slips another 3.25% on Nasdaq as the new launches fail to impress investors.
00:45Nasdaq, meanwhile, scales yet another high along with the S&P 500.
00:48All eyes now on this evening's inflation report as markets firm up expectations for a Fed rate cut next week.
00:59The Trump-Modhi social media exchange yesterday is paying off with trade talks set to resume next week.
01:05Reports say Rajesh Agarwal, India's chief trade negotiator, will travel to Washington next week to resume talks with U.S. counterparts.
01:12Commerce Minister Piyush Goyal had yesterday confirmed that India was in active dialogue with the U.S.
01:18The European Union has likely rejected U.S. President Donald Trump's call to hike tariffs of India and China to 100%.
01:26A Reuters report citing EU diplomats said there was no discussion on possible tariffs.
01:31India and EU are close to finalizing a free trade deal about which Prime Minister Modi also had a conversation with his Italian counterpart last evening.
01:39The Infosys board will meet today to consider a share buyback.
01:45If approved, this will be the fifth buyback in eight years, with the last being in 2022 when the company spent 9,300 crore rupees.
01:53The Infosys share has jumped 7% in two trading sessions since the buyback was announced on Tuesday.
01:59All right, let's dive right into the pre-open setup and take a look at what we're going to be watching out for today as well.
02:21I also got Shailendra Bhatnagar with me to decode how we stand on the markets.
02:25But first, let's take a look at the global setup. Nifty today slightly tepid in pre-open at this point of time.
02:31Remember, we've been tracking, of course, whether or not we're going to see some kind of a festive uptick.
02:36But right now, it's just been steady as we speak. Although lots of pockets of activity.
02:41IT today continuing a little bit of an uptick in pre-open at this point of time.
02:45And we'll dive a little deeper into that as well.
02:47Let's take a look at global markets and how we really are coming through from the overnight action as well.
02:52As I just mentioned, we did see a decent uptick when it came to the U.S. overnight.
02:58And Asia this morning also pretty much intact right now.
03:01There you have it for you. S&P 500, Nasdaq all pretty much in the green or flat.
03:05Dow saw a little bit of a downtick yesterday, just down about 0.4%.
03:09And Asian screens this morning, we're seeing a good amount of green across the board.
03:13So the setup is intact. We've got a quick check on crude, on currency and on metals for you as well.
03:19When it comes to gold and silver, they're still looking good, hovering near those all-time highs.
03:24And at the moment, we're seeing a marginal downtick in pre-open.
03:28But otherwise, they're still definitely trading at those record levels.
03:31Just about flat right now.
03:323,679 on Gold Comics as we speak at this point of time.
03:37We've also got IPO action.
03:39Remember, Urban Company.
03:40That day one subscription has been at about 3.29 times the issue size.
03:46And at a 1,900 crore rupee issue size that we're looking at, the price band is coming at 98 to 103 rupees a share.
03:54So a lot of excitement around Urban Company.
03:57We'll of course be speaking to the management later today as well.
04:00Meanwhile, Dave Accelerator.
04:01Let's give you a day one update there.
04:03And 5.3 times the IPO size there is 143 crores and the price band is 56 to 61.
04:09So these are a few that we're tracking.
04:11And Sringar, House of Mangal Sutra.
04:13The subscription has been about 2x and the IPO size there is 400 odd crores with the price band at 155 to 165 rupees a share.
04:22Let me bring in Shell.
04:23Shell, this morning we're seeing a pretty flat, steady start at least from the pre-open indications right now.
04:28What are the top three things you're going to be watching out for in today's trade?
04:33Well, good morning Abha.
04:36The top three things in the decreasing order for importance are of course the Nifty IT index, in particular Infosys as you mentioned rightly.
04:45Today is the day when the board of Infosys decides about the amount of buyback they will put in charge.
04:51And of course, defense stocks and finally the Nifty.
04:56What we've seen in the market is that the Nifty has broken out of a range.
05:01Yeah, you were saying something.
05:03No, no, go ahead Shell, go ahead.
05:07Okay, the Nifty is broken out of a range.
05:10And it's likely that today being the weekly expiry, you will see the Nifty climb above 25,000 as a closing level.
05:18And it will be very ably supported by defense stocks and by IT stocks, in particular Infosys and TCS.
05:26Remember, both of them were beaten down very badly.
05:29They're down about 20-25% from their all-time highs.
05:32As also the Nifty IT index for the last two days has been very strong.
05:382.7% yesterday, 2.9% up over the previous day.
05:45And this is the kind of momentum that you see now coming into markets.
05:50Value buying as also buying from concerned quarters because of the kind of valuations that have come in for IT in particular.
06:00I want to dive a little deeper on the IT pocket shell and then we'll bring in Gorang as well.
06:05But on IT, what's driving this buyback action?
06:08Let's pull up some of those key heavyweights on a year-to-date basis as well.
06:11Take a look at the kind of lag that we've seen and really understand what's driving the signal for the buyback and what it means for a retail investor.
06:19Well, the IT index lost 5,000 points in the month of July and August put together.
06:31And much before that, it's down from an all-time high of about 45,000 to what it is today, 36,000.
06:38And that's mainly because of fears of artificial intelligence taking away a lot of chunk of Indian businesses as also the fact that globally IT spend has decreased.
06:50And that has resulted in Indian IT companies falling down substantially from their all-time highs.
06:55Remember, these are top-class corporates with billions of dollars worth of cash, absolutely zero debt and a great track record for shareholder value creation.
07:05And this is the reason why you see a buyback coming in from Infosys.
07:09It feels that the value of its share is not well appreciated by the market and it will announce a price at which it is going to buy back maybe 2,000, 3,000, 4,000 crore rupees of shares to extinguish them.
07:22That will create a higher EPS and therefore a higher stock price.
07:27It's a globally expected and accepted practice to improve shareholder value by buying back your share at lower levels.
07:35Yes, Aadha.
07:36All right.
07:36Fantastic.
07:37Let me bring in Gorang Shah.
07:38Gorang, good morning.
07:39I'll come to you on IT in a little bit.
07:41But first, let's have the nifty set up and what the markets are looking like.
07:45Shail has been talking 25,000 all week.
07:47He's waiting to close above that point.
07:50But we started the week on a good note with lots of positive triggers.
07:54Still looking a little flat and pre-opened.
07:56What's your expectation, Gorang?
07:57How are we going to trend?
07:58Thank you so much, Aadha, for having me on the show.
08:02Good morning to you and my good friend, Shail.
08:07Discussing and talking to him after a very long time.
08:09Of course, we've been in discussion about markets some time back.
08:12Good seeing you, Shail, this morning, as usual.
08:15Well, on the markets, Aadha, I think we've seen six days of rally.
08:18So, I think we should take a pause.
08:22Maybe a flattish to a little bit of downside opening.
08:27It would be interesting to see where do we find a lower-end support.
08:31But I don't think it's going to be a deep red.
08:34I think a marginal red color on the Sensex and Nifty.
08:38Stock-specific, as Shail was mentioning, you are definitely going to see a lot of action.
08:43That's where the focus is going to be.
08:44With respect to the triggers in the market, I think we've had three recent upgrades or positive rating from Fitch, S&P, and from E&Y, in terms of our GDP growth rate.
09:01In terms of whatever came out from President Trump, though it is very contradictory to itself, but anyways, we'll take it in the positive side.
09:11And the development in terms of implementation of GST on 22nd of September and how much does the consumer get benefited.
09:20Along with that, my sense is that if we are, as Shail mentioned, if we are able to maintain about 25,000 and move towards 25,100, my sense is that FIs are very short in our market.
09:34Shorting from them will help us gain moment up on the upside.
09:39All right, on opening bell then, just about flat and still eyeing the 25,000, 25,100 mark.
09:46Remember, gold and silver have also been trading at all-time highs.
09:50And I'll come back and ask Gorang whether or not that's also a factor in keeping equities a little subdued.
09:55Right, there you have it, gold and silver continuing to trade at those records right now.
09:58But market action this morning, we've got a downtick on the Nifty IT, just a marginal downtick coming in there.
10:04Flat on the auto index, Nifty as well, just about flat.
10:08Meagre downtick right now.
10:10Let's pull up some of the gainers for you.
10:11Adani Ports, top of the charts, NTPC, Zomato this morning.
10:14Some of those stocks are moving right now.
10:16We've got ONGC.
10:18We've got actually, you know, an outperformed call coming in on TCS.
10:21That stock is one of the top movers today.
10:24CLSA, they're giving it an outperformed rating coming in.
10:26So that's on TCS for you.
10:30Let's take a look at some of the other pockets of the market.
10:32So Autoluximdude, Consumer, Pharma, we're seeing Oropharma jumping up, Oracle Fin.
10:37Some of the gainers at 3-4% on some of these names.
10:40Rightcom, Oracle Fin, Oropharma, some of these names are looking pretty decent this morning.
10:45And let's take a look at some of the others as well.
10:47We've got Data Pattern, Polymedicare, some of the other names there.
10:51They're seeing 1-2% of an uptick coming in.
10:53We'll continue to pull up some of those gainers for you.
10:55IT looks fairly subdued despite the buyback news coming in.
11:00No real traction coming in on any of those majors right now.
11:04Advanced decline ratio looks pretty even actually right now.
11:08As Gorang also mentioned, it's pretty flat.
11:12It's no clear indication either way right now.
11:15But, you know, one of the top losers there is actually in fee reliance, no support.
11:19Nifty Bank is also tepid this morning.
11:21So, no real action coming in right now.
11:24Gorang, I want to get your take on IT as well with the buyback news around in fee.
11:29And, you know, clearly a signal from the IT heavyweight to the market in terms of, you know,
11:34its valuation and, you know, where it stands.
11:37But what's your outlook, you know, for a retail investor looking at some of these blue chips?
11:41Would you pick something else within the tech pack or would you stay away altogether?
11:45So, Abha, we have fairly equal weight on all the three segments of IT.
11:51So, be it large cap, mid cap or small cap.
11:54And we've been positive since a very long time.
11:56Even as recently post the tariff announcement made on 2nd of April by President Trump, a lot of people had written obituary for the IT sector.
12:09We remain positive because we believe that, yes, there are difficult times, no denying about that.
12:14Maybe two, three quarters of pain in terms of earnings would also be something that we are ready to accept.
12:20But beyond that, I think if one has to look with a one and a half year plus kind of time horizon,
12:26I think, you know, we saw a very strong commentary from Oracle, parent company,
12:32and we saw the stock react as far as the Indian business is concerned,
12:37which was up about 10%, if I'm not mistaken, yesterday.
12:40So, we remain positive.
12:42We believe that there will be some time needed to exactly understand where the U.S. economy is headed,
12:49interest rate cuts, and positive commentary from President Trump has given a benefit to the IT sector.
12:56But this buyback news is now priced in.
12:59I think a formal announcement, and you know, this is the fifth buyback, correct me if I'm wrong, in the history of Infosys.
13:05So, you know, and on the fundamental side, we don't give too much of weightage.
13:11Now, a small disclosure, since we are discussing Infosys about that,
13:14all recommendations in this show are part of our fundamental team.
13:18Our company, GeoJit, or I, we do not have any personal investments.
13:22No financial interest, no conflict of interest, but we give recommendations to our clients on similar lines.
13:26So, we are positive on IT, including Infosys, TCS, HCL Tech, Tech Mahindra.
13:31Amongst the mid-cap play, if you will, Coforge, LTI, Mind3, LAT Technologies,
13:36smaller names, Science Limited, and KPIT Tech.
13:40All right.
13:41So, let's note down all of Gaurang's recommendations there,
13:45and a couple of them also seeing action this morning.
13:47You know, I want to pull up Oracle again, and as Gaurang mentioned,
13:50it is, you know, on the back of the global news coming in.
13:55A big multi-billion dollar deal, you know, with OpenAI,
13:59and that's really, A, pivoted Larry Ellison to almost the richest man in the world.
14:0515% now, a one-week gain for Oracle.
14:08You know, that happened just overnight, literally,
14:11and we're continuing to see traction on that stock this morning as well.
14:14So, that's one of the key newsmakers that you're seeing in trade today.
14:19Shell, what else have you picked up on opening?
14:20I think, Abha, we'll need to mark BEML and the entire defense pack for one reason.
14:31There is news coming in that BEML will become a Maharatna PSU company
14:38from the Mini Ratna that it is designated at this point of time,
14:41and you see this stock about 1, 1.5% higher.
14:44This is news that's just come in.
14:46And, a higher status basically means more financial independence
14:52for the board to take, without permission from the government of India,
14:56bigger projects, and that is something that is not only driving BEML,
15:01but the entire defense pack is also up in gains.
15:05Remember, for the last three or four months, post-Operation Sindhu,
15:09a lot of profit booking had happened in counters like BEL,
15:12in shipbuilders like Mars Gowndock, Garden Reach.
15:15All down between 30-25% from their all-time high.
15:19And, again, value buying is back into the market.
15:23If you look at the Nifty Defense Index,
15:25it's also corrected about 18-20% from its all-time high.
15:28And this is the reason why both defense and IT stocks
15:31are the cornerstone of this value buying that's happening in the market.
15:35Keep an eye out on BEML, BEL, Mars Gowndock in particular,
15:40Cochin Shipyard, and Garden Reach.
15:42Abha.
15:43All right, thanks for that, Shell.
15:44Gurang, I just want to go a little deeper
15:47into some of the picks that you mentioned as well.
15:49You mentioned four or five names.
15:50You know, if you want to just take us through a little bit more
15:53in detail on the strategy on a couple of those names,
15:56I think that'll be really beneficial to some of our viewers.
16:00I'm sorry, Abha.
16:01I couldn't hear you properly.
16:02Your audio was cut off.
16:03You mentioned a few picks this morning from L&T, KPIT.
16:06I was wondering if you could go a little deeper
16:07into the strategy on some of the picks that you mentioned.
16:10So, you know, the sensible thing right now,
16:12first of all, how do you plan your investment strategy?
16:15That's the most important thing.
16:16Yeah.
16:16Yes, you need to look at companies which are advanced into AI,
16:23along with that, a little bit of focus into diversified product platform.
16:28So, the most sensible thing to do is,
16:30don't think as if there is no tomorrow.
16:32So, start at current levels, there is clarity,
16:37much clarity needed, Abha, in terms of where the U.S. economy is added
16:41and what is the stance, specifically with the India-U.S. tariff-related trade agreement.
16:49So, I would say that look at all three, pick one or two from small cap,
16:55pick one from mid cap, pick one or two from large cap.
16:58Deploy, deploy maybe about 25-30% at current levels
17:02and as and when you get opportunities on the lower side, add on to it.
17:07A little bit of concern with one name in the large cap IT pack,
17:15that is Wipro, on which we are under it.
17:16In fact, we have a reduced stroke, stroke, send call on Wipro
17:20because of difficulty in earning.
17:23So, you need to be a little bit stock-specific.
17:26Not anything and everything is going to create wealth for you in IT.
17:30All right.
17:31So, good advice coming in there from Gaurang
17:33and it's clearly all about IT this morning,
17:35at least in terms of the news
17:36and, you know, re-looking perhaps at the strategy there as well going forward.
17:41So, that's on IT right now.
17:43Let's pull up some of those other news makers,
17:45just see if any reaction coming in there.
17:47We've got Amuthut Finance investing 2,000 crore in its housing finance arm.
17:52Let's pull that up for you, see if it's really reacting to the stock.
17:55Auto, we've been talking about and, again, even an Aisha, for example,
17:59is passing on that GST benefit to consumers.
18:01But auto is looking a little flat this morning.
18:04Kotak Bank, yesterday we saw a big move with Sumitobo Mitsui offloading 3.2 crore shares
18:08and we saw quite a bit of action coming in on the back of that.
18:12This morning, Kotak Mahindra Bank is also a little flat right now.
18:14So, it's a pretty flat market as we speak.
18:17Bank of Baroda, talking about financials, has cut its overnight MCLR to 7.85%.
18:21Let's pull up a Bank of Baroda and see what's happening there.
18:25And just touch base on some of these news makers and see if we're seeing any reaction.
18:28Just a marginal half a percent on a Bank of Baroda.
18:31Gaurang, I know Aisha is one of your favourites as well.
18:36You know, you've always liked that stock.
18:38What's the outlook on some of these auto majors,
18:41Aisha and particularly this Vestasi?
18:43Abha, honestly, I think Shell is rather more positive on Royal Enfield motorcycles.
18:55He owns one if I'm not mistaken.
18:57If I recollect that right.
18:58But yeah, coming back to your question,
19:00I think it was not too long ago that we had a launch from Bajaj, Triumph and Harley Hero
19:06in the same category, 350 plus category.
19:10I still very clearly remember that day Abha.
19:13Aisha Motors was trading at about 3,300 or 3,400.
19:17Both companies announced the launch at the same day
19:20and the stock corrected from 3,300, 400 to about 3,000 levels.
19:25Fast forward to the current situation.
19:27Look where the stock is of Aisha Motors.
19:29It is more than doubled.
19:30So, you know, newcomers will come and go.
19:35But legends will always last in the market.
19:37All right, Goran.
19:38They will agree with this.
19:39So, you know, extremely positive on Aisha Motors.
19:44Not only because of the two-wheeler Royal Enfield product platform,
19:49but also with respect to its Aisha trucks and buses
19:52and also with respect to Volvo JV.
19:56All right.
19:58Goran, thanks so much.
19:58We're completely out of time, Shell.
20:00Thanks as well for joining us on the show.
20:02And we'll see you again next week, Goran.
20:04As we leave, let's bring you the latest news,
20:07the biggest news when it comes to Larry Ellison
20:10overtaking Elon Musk for a few hours on Wednesday
20:12to become the world's richest person.
20:15However, the 81-year-old founder of Oracle
20:17ended the day back at number two,
20:19just a billion dollars short of the Tesla founder.
20:22Ellison was nearly $90 billion richer overnight.
20:26Oracle shot up more than 40% in the past three trading sessions
20:30on AI Outlook.
20:31Its deal with OpenAI on cloud and AI computing
20:34has seemingly excited the markets,
20:36pushing other AI stocks like NVIDIA, Amazon, Google, Microsoft
20:39all into the green.
20:41And that's really what's powered US markets overnight as well.
20:45That's a wrap on this edition of the Business Today Show.
20:50Do stay tuned.
20:51We'll continue to track all the market closing action
20:53for you at 3.30.
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