- 4 months ago
Dalal Street outlook: Is market entering a consolidation phase?
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00:00good morning and welcome to market opening on our brand new collab show
00:20between business today and India Today TV just after 9 and we're here to get
00:25you ahead of the curve as markets kick off for the day let's take you through
00:29the top corporate and financial news this morning
00:33shocker for the pharma sector as US announces a hundred percent tariffs on
00:38branded or patented products from the first of October Donald Trump says
00:43exemption only if the company is building manufacturing plants in America
00:47Trump also slaps up to 50% tariffs on furniture and 25% on heavy trucks it's a
00:57classic case of good news pushing markets into the red US markets recede as better
01:02than expected GDP and jobs data from speculation that the Fed may not cut
01:07interest rates again anytime soon Asian markets volatile as traders fair bets on
01:11tariff and rate pressure
01:13Indian IT stocks in focus after five days slide Accenture Q4 beats estimates with 7% revenue
01:21growth on AI demand setting the tone for TCS in fee HCL tech and peers amid Trump's new H1B visa rules
01:28LG India throws its hat in the IPO ring reports say it's mega public issue of of 11,500 crore rupees
01:38is likely to open in the second week of October sets the stage for at least two blockbuster issues next
01:45month along with 15,000 crore data capital and as reports say phone pay also lining up
01:52household savings from GST rate cuts likely to be as high as 30% a joint report by FICI and TRI say
02:03essential and discretionary items are more accessible with the number of items taxed at 5% nearly tripling
02:10to 149 categories the report also adds that those with higher incomes now paying a greater share in taxes
02:17all right let's take a look at the market setup this morning overnight correcting somewhat on Wall Street
02:31as you can see some amount of profit booking as well as now market factoring in that perhaps with growth
02:36intact the Fed is unlikely to cut those rates anytime soon as is anticipated and remember their commentary
02:43also was fairly cautious in that respect with regards to the cuts they were keeping a close eye
02:49so we're seeing that overnight reaction tech also taking a bit of a breather after what we've seen in
02:54terms of quite a run-up on some of those tech stocks although Apple seems to be seeing a bright spot there
03:00on the charts Asia this morning also in the red so let's pull up the nifty and see what we're heading in
03:05for in terms of this morning's trade and what the pre-open ticks are looking like right now
03:10we've been a little quiet this week and today as well looking at a three-tenths of a percent
03:15downtick in the pre-open let me welcome Shailendra Patnagar joining us as always this morning chief
03:21analyst and editor market Shail what's the setup looking like today I know even you are struggling
03:25to hunt a little bit for some of those action points today
03:28well Abha good morning to you and good morning to everyone firstly thank God it's Friday we've seen
03:38four days of consistent selling pressure and profit booking on the nifty the index as we know ended
03:44almost at its days low yesterday and is now in the pre-open down 72 points well as you mentioned
03:51it's Trump economics which is derailing everything well I think there will be a silver lining on this
03:58hundred percent pharma tariffs that Mr. Trump has employed on US imports of pharma products they are
04:06on branded pharma and as you know the Indian pharma business is mostly generic towards the US nevertheless
04:16the pharma index is down four successive days there will be a knee-jerk reaction let us see what happens
04:23to Sun Pharma to Biocon in particular but crude oil prices are also on the boil down up for the fourth day
04:30so that's a negative for the lal street only PSU banks PSU banks and PSU stocks Abha are providing some relief
04:39so Friday let's hope the selling ends somewhere like 24 800 Abha okay I'm actually going to take
04:46everyone through this pharma news in a little bit more detail and we'll have Neetu joining us in a couple of
04:50minutes as well but just to really understand that Trump has now come out and said that they'll be imposing a
04:57100% tariff on any branded or patented pharma product unless the company is building their pharma
05:03manufacturing plant in America and saying that this will come into effect from the 1st of October
05:08and indicated that tariffs could rise to 150% and eventually 250% over the next 12 to 18 months
05:15I mean all of this I think the markets are also getting slightly immune to this shell with Trump's
05:20constant commentary but it's not something that you could ignore or dismiss given given of course the
05:26kind of industry impact it's likely to see we've already got some brokerage views coming in this
05:31morning Sun Pharma also in focus because it has a lot of specialty products as well and specialty sales
05:38are at about over a billion dollars at this point of time and it doesn't disclose the percentage from
05:44US plants but they have indicated that current capacity is good enough in case they need to
05:49undertake onshore manufacturing
05:50Abha I think you will have a knee jerk reaction on Sun Pharma and to some extent even Biocon
06:00let's look at how prices have moved in the pre-open trade well there is just one pharma stock in the
06:06green that's IPCA and IPCA has very little to do with the US but top losers include Sun Pharma 2.6%
06:13lower Biocon 2% lower actually I was speaking to a fund manager on the pharma space
06:19and he said he himself would not touch pharma business till as an investor we have clarity so a
06:27knee jerk on the way as far as farmers concern and Abha kitchen appliances heavy trucks are also now under
06:34fresh tariffs as far as US imports are concerned absolutely so in fact if we just take a look at that as
06:40well stocks to watch today carousel stove craft with the tariff 50% tariff that's being imposed on
06:47kitchen cabinets bathroom vanities associated products US has put about a 30% tariff on upholstered furniture as
06:53well so something like Stanley would be hit let me also welcome in Mayuresh Joshi
06:57Mayuresh good morning once again Trump tantrums they're playing havoc with the market want to get your view on the
07:03index setup of course but also on pharma in particular this morning
07:07morning Abha I think the index is going through a phase of consolidation and obviously I think Trump
07:13tariffs and his rhetoric every now and then is not helping the markets at all and therefore a range
07:19bound move is something that we see yeah as far as the index is concerned that obviously earnings will
07:25be key but you're all expecting q2 to still be solved with better commentaries at q3 q4 but again I think
07:31the Trump commentary and rhetoric that's that's not helping the markets at all absolutely Neetu's with us let
07:39me quickly go across to her we still got a few minutes till the opening bell Neetu take us through exactly
07:45what Trump is saying because around a billion dollars of Indian pharma exports currently have a sword
07:51hanging on them and that too kicking off as early as next week yeah good morning Abha so basically
07:57President Trump has announced just you see 100% tariffs on imported branded and patented medicines in
08:03the US so but the tariff would not automatically apply if the drug maker is actively building a
08:09manufacturing facility in the US but this is very important why because it it shows a major policy
08:15shift so far the tariffs were you know largely used in sectors like steel auto electronics but not on
08:21pharmaceuticals so this is a new thing why by targeting these innovative drugs the US is actively you know it is
08:29effectively pushing for domestic production and self reliance on high value medicines so it also sends a warning
08:37into the pharma that it is it is pharma is now part of the trade war toolkit this could disrupt global supply chains and
08:45the options and pricing potentially have got it in fact you know we are seeing
08:51you know we are seeing us remain of course the largest market for Indian pharma and
08:55therefore a lot of concern around this we started to get some brokerage use coming in this morning
08:59Ashika for instance saying that headline risk is high but operational risk at this
09:03point does seem low for exporters but watch out for any policy spillover into
09:07specialty or complex generics because that's where we might feel the pain
09:11Neetu let's let's get your input as well on the kind of impact the sector may see
09:16and I know that of course you know it's a little complex in terms of the different
09:20kinds of pharma companies as well but where are we likely to see the impact?
09:25So what I have been speaking to the analysts for India the immediate impact is limited what as per the
09:31analysts because see India's core exports to the US are basically generics and these tariffs are basically aimed at
09:38branded drugs as you also said so it is a double-edged signal from the US on the one side the
09:46costlier branded medicines in the US could make Indian generics even more attractive in fact
09:51possibly boosting demand but on the other hand it raises concern about the whether the
09:56tariffs could be extended to generics in the future since the US is India's largest
10:02pharma market according to almost 40%
10:05I am just going to interrupt you Deva thank you for that and I think that's the key point in terms of
10:09keeping an eye on the generics just opening bell on your screen
10:122% down tick there on the Nifty we were expecting it to be a little muted a little quiet
10:17let's pull up some of those gainers and losers for you
10:19Pharma index is immediately taking a hit let's pull up Sun in particular
10:23we are going to see a focus on Sun until it becomes clear exactly what the impact may be
10:27some of the other gainers on the Nifty on your screen L&T, JSW, Grasim on the top of the charts today
10:33Bajaj Finserv, Hero, Hindalko let's pull up some of the names on the downside
10:38and let's also pull up Sun Pharma to see what's happening there
10:41yes 4% knock close to 5% as we speak
10:46Shell it's coming in swift and it's coming in sharp for Sun Pharma and some of the other
10:50pharma majors as well CIPLA, DRL all of them some of the biggest losers today
10:58absolutely Abha it's sharp and swift and this is the knee jerk that we are talking about
11:03that no matter whether it is on branded pharmaceuticals but the market is reacting as the market should react
11:13and therefore you have this very sharp fall that is coming into the Pharma index
11:181.7% lower fifth day of losses in the market and all 17 stocks in the Pharma index are in the red
11:26within the Nifty Dr. Reddy's CIPLA Sun Pharma are representative of the Pharma index
11:32all three are the top losers as far as prices are concerned and you have heavy volumes accompanying this downtick Abha
11:40alright
11:42Meirish I know that you said that we weren't looking at you know too much of too much of action either way right now
11:50slightly range bound market but overall in terms of direction how are you viewing the current trend which way do you anticipate things to go
11:58I think once there is some element of clarity that comes through once Q2 numbers start flowing in
12:06and a large aspect of the street belief is though Q2 absolute numbers might be solved the management commentaries might actually hint
12:14to better numbers in Q3 and Q4
12:16and if that starts taking place I think markets will start sensing that earnings might just bottom out and might start coming up an inch higher as we start heading into the next few quarters
12:28the second aspect is the government focus in terms of the capex continuing and private capex where green shoots are already being very very evident
12:36if that starts coming back slowly and steadily I think that is a supportive factor for the markets
12:41so I think till that point of time I think it's going to be still that consolidation action that you're probably going to see as far as the main indices are concerned
12:49because a large part of that index both banking and IT are not performing at all and therefore I think in the broader markets
12:56certain sectors and certain stocks which are domestic focus might do well
13:01Okay, what about this entire spate of IPOs that are being planned and ready to hit the market
13:07we're talking mega IPOs here
13:09you know Shail let me come to you first on this because you know we're of course tracking some of the ones that are slated as well
13:15like a phone pay for instance as well as the ones that are currently going to be hitting the markets
13:19and it's going to be it's going to really take an enormous amount of attention away from the secondary markets
13:25Absolutely Abha you hit it on the nail as far as the markets are concerned the amount is finite
13:35so investors either go into the secondary market or pull it out and put it into primary market
13:40so 15 IPOs are going to get listed in this Navratra and money is flowing in from secondary to primary
13:46and the three major ones that you mentioned Tata Capital, Phone Pay and of course LG India
13:53all that money is going to come in from secondary markets and this is the reason
13:57another reason why you see this profit booking for the fifth day in a row as far as the Lal Street is concerned
14:03lot of demand coming in from the IPO part of the business as far as the broader market structure is concerned Abha
14:10So clearly there's value to be had here Mayuresh what's your view and how attractive have been some of the recent spate of IPOs that have hit the market
14:21and like we were discussing this morning three mega ones yet to come we just finished with urban company
14:26now we've got LG Tata Cap you know and so forth that are also going to be on the anvil
14:32So Abha I think good names are coming in and therefore I think as Shail rightly mentioned I think there is a sufficient opportunity
14:39and if you probably look at the IPO index generally I think that has outperformed the overall market by a huge margin
14:46and therefore I think the appetite in terms of investors who probably have missed some element of market rally
14:53though the markets have been consolidating but I think the mid cap rally which has probably happened over the last few weeks
14:57I think there is some element of a feeling out effect that comes through
15:02and with IPOs select IPOs doing exceptionally well specifically on its open as well
15:08I think there is a temptation to probably look at the subscription numbers that are probably way way higher than what one believes in
15:14and therefore select IPOs might continue doing well
15:17example being urban company as you mentioned I think there is a huge market in front of them over the next 10 years
15:22How that translates in numbers is something to this
15:25Alright, well another pocket of the market between defence, rail, shipping, we are seeing that entire segment moving
15:32Let me touch upon defence first
15:34India's defence sector in fact seeing a boost with HAL securing a more than 62,000 crore rupee fighter aircraft deal
15:41and a large part of this will of course trickle down to the private sector
15:45Another billion dollar deal is set to be signed just next month
15:49We expect to sign it in October
15:52The contract will be one billion plus
15:54The contract negotiations are done, the price is finalised
15:59So we are only going through the contract details and we have to sign it
16:05So now that this main contract is signed
16:08In October we will sign the contract with G for 113 engines
16:12So you can see that out of this huge number, 62,000 odd crores
16:17Part of it is going to go into the indigenous supply chain
16:21So that will have this downstream effect of creating jobs
16:25For example even we are indigenising a lot of materials
16:28We are working with Vidhani for indigenising some of the materials
16:33We are working with Yantra India for some aluminium extrusions
16:38Recently we have partnered with them
16:41So we are trying to build those supply chains to reach the 70%
16:46So obviously when these new radar which is there, the indigenous radar
16:52Uttam that is going to come or the Swiam Raksha Kavach
16:56These are going to be made in India
16:58So obviously there will be a spin-off in terms of all these companies
17:01Which are going to make this, will generate lots of jobs
17:04Alright so defence, rail, shipping and we are continuing to see some action there
17:10But Shail, before we get to some of those names
17:13I think market breadth is just further weakening
17:16And a lot of selling building up on those farmer names
17:19Absolutely Abha, it's 1 is 2, 3 as far as advanced decline is concerned
17:28Just 550 stocks in the green versus 1800 that are in the red
17:33And all 19 indices are down in the red
17:37Led by of course the pharma index down 2.2%
17:40And it's the option space that is throwing heavy selling pressure
17:44There's a lot of put buying that's happening in Aurobindo Pharma, in Cipla
17:49In Divi's, Dr. Reddy's, Lupin, Sun Pharma in particular
17:54As also Zydus Life
17:57Alright so really not looking pretty this morning on those pharma names
18:01Even if it's a knee-jerk reaction
18:04Markets are definitely coming down hard on some of those pharma counters
18:09I just want to pull up even some of those kitchenware stocks
18:12Just to see if they're also seeing any kind of reaction coming in on that tariff news
18:17Stovecraft, Stanley Furniture, Carousel
18:21Let's just try and pull them up to see if there's any kind of knee-jerk reaction on the tariff news as well
18:27We'll pull that up for you in a moment
18:28But interesting to see that no support coming in from
18:31Otherwise from consumer, auto or any of those segments today
18:36Stanley Lifestyle is also down about 2% on that news
18:39In fact only 3 stocks now are in the green
18:42Out of the 35 top traded by volume on the NSC
18:45So 3 gainers, we've got Wrights, we've got FCL and we've got Anantaraj
18:51Let's just pull up those 3 stocks for you, Wrights, FCL and Anantaraj
18:55So it's a very, very quiet market right now
18:58And these are your gainers
18:59Wrights is up about 6%
19:01I'm just trying to see if there is a certain news trigger coming in on any of these counters
19:06But Wrights, yes, the company has received a letter of award worth 18 million
19:10So that's about 153 crore from South Africa's TALIS
19:14They're going to be supplying diesel-electric motifs
19:16So that's why Wrights is running up this morning
19:18FCL and Anantaraj, also the other two that are moving right now
19:23And we've also got continued selling pressure coming in on IT
19:27TCS in fact now is at a low
19:30We're at 2934 on TCS
19:33That's a fresh 2-year low
19:35Mahiraj, coming to you on IT
19:37Because we're really not seeing any respite for some of these IT majors
19:42I think they will go through a period of consolidation
19:46I think a large part of the price correction is now done
19:48But the street is of the belief that all the issues that are probably lingering as headwinds
19:52Add to that the latest H1B controversy that is probably playing out
19:57And the business model which itself now probably is under some element of pressure
20:02As far as the new agentic AI models, platforms globally and competitively are concerned
20:07How does that have a say in terms of new orders, margins on these orders, pricing of these orders as well
20:14As well as the time and cost effort that probably will go in
20:17In terms of developing new platforms and upscaling their employee base as well
20:21So to that extent I think there are a lot of headwinds that the sector is probably facing
20:26We were always of the belief that companies which are a little bit more adoptive
20:31In terms of incorporating these technologies up front might continue doing well
20:35And therefore the only stall that we're probably still holding in our global portfolio is emphasis
20:39Because I think his emphasis is doing a lot more as far as AI is concerned
20:43And that portion might actually continue going higher in the next few months
20:47Okay, alright, I'm just going to go back to pharma for a moment
20:51So IT remains weak, pharma, this is all Trump impact honestly
20:55But again, more brokerage calls coming in that the impact is likely to be limited
21:01Because remember, largely India exports generics
21:04So unless it's patented drugs, it seems like perhaps the impact will be limited
21:10You know, at this point of time, a little bit of uncertainty remains about whether complex or specialty generics
21:17Which are start, which Indian companies are starting to look at
21:21May come under scrutiny in the future
21:23So the immediate risk at least seems to be limited
21:26But markets are just reacting on news right now
21:30And pharma is seeing a huge dive
21:33And the index also now down about 80 points
21:35So it's clearly a little bit weak
21:37An advanced decline ratio looks terrible this morning
21:40Any other closing highlights, Sir Shell, from opening trade?
21:44I wish, Abha, I had something positive to say
21:50Pharma is taking to the cleaners
21:53Out of top 15 losers in F&O
21:5713 are pharma stock futures led by Loras Pharma
22:013.5% lower
22:02We've talked about Sun and Biocorn in the opening comments
22:06Divi's, Alchem, Mankind, Lupin, PPL Pharma
22:12I'm talking about large heavyweight blue chip pharma reacting very, very negatively
22:19And the advanced decline is now worsened
22:22Just 480 stocks in the green
22:25And the number of stocks falling has now risen to 1922
22:30The Nifty has tested 24800 on its way down, down 88
22:35Let us see how it goes
22:37Alright, well, nothing to do but wait and watch
22:40Mayuresh, thank you so much for joining us
22:42Looking forward to having you back on a more bullish day
22:45So we can discuss many more trending stocks
22:48Shail, thanks again for all of your inputs as well
22:51That's where we leave it to come back
22:53And track market closing with us at 3.30
22:55And track market closing with us at 3.30
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