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Experts suggest that while the IT sector looks promising in the short term, investors should take a cautious approach and focus on selective stocks that show consistent growth potential.
Transcript
00:00Good morning and welcome to Market Opening on our collab show between Business Today and India Today TV.
00:05It's 9am. We're here to get you ahead of the curve as markets kick off trading for the day.
00:10Let's take a look at what's hot in the corporate and financial space.
00:14Fresh tariff threats from Donald Trump spark another sell-off in the U.S. markets.
00:18The U.S. President says he will stop imports of cooking oil from China as retribution for China's ban on American soybean.
00:25Wall Street turns negative on prospects of a renewed trade war between the two biggest economies.
00:34A clearly rattled Trump administration now says India an ally as it battles China's curbs on rare earths.
00:44U.S. Treasury Secretary Scott Besson accuses Beijing of pointing a bazooka at the free world supply chains and industrial base.
00:51Says he expects to get substantial support from allies like India.
00:55Tariffs set to take their toll on the world economy.
01:01IMF focused two years of continued slowdown.
01:04India, however, retains the crown of the fastest growing economy with the 2025 growth focus raised by 20 basis points to 6.6%.
01:13IMF says tariff squeeze will be felt next year.
01:17Lowers focus to 6.2%.
01:18Red faces among Tamil Nadu's Stalin government as Foxconn denies any fresh investment in the state.
01:29This comes a day after the state industries minister, TRB Raja, announced the iPhone maker will invest 15,000 crore rupees in the state and create 14,000 high-value jobs.
01:40DMK government blames jealousy-driven skepticism by the opposition.
01:4451 days after suspending postal services to the U.S. due to revocation of the de minimis rules,
01:54India Post will restart all categories of postal services to the U.S. from today.
01:58A new delivery duty paid system for shipments to the U.S. will help you send parcels, documents and gifts in a transparent way to your friends and relatives.
02:07All right, the global setup on your screen.
02:18As you can see, taking a little bit of a hit on the back of renewed tariff wars.
02:22We're also joined this morning by my colleague Shalendra Bhattnagar, Chief Analyst and Editor Markets,
02:27as well as Sharada Vasti, Head of Research, PCG Smiths.
02:30Thanks for joining us both of you.
02:31Asia at least has maintained its gains and remains intact.
02:34Let's take a look at what the Nifty is in store for this morning.
02:37And we're coming off the back of renewed vigour when it comes to earnings season,
02:42as well as strong IMF commentary, at least when it comes to India.
02:45Nifty looks like it's set for a green tick on opening.
02:48Shal, good morning. Let me come to you on what the setup is looking like.
02:55Well, very good morning to you, Abha, and a warm welcome to all our viewers.
03:01Yes, a mild gap up, 36 points on the Nifty.
03:04We are hopeful of resuming the upward trajectory that we saw.
03:09And therefore, 25,250, 25,300 should be on the cards this week.
03:15More importantly, we see the most recent base, which is 25,025, 26,37, all being tested.
03:24So, a bounce back from these levels, a very strong traction in PSU banks as also wider PSUs.
03:33So, that is something that needs to be tracked as also Abha, gold and silver.
03:39In fact, gold is something which should follow the trajectory of silver because of the short squeeze in the physical market.
03:46And all that we learnt from Shakespeare in our school, all that glitters is gold.
03:52Often, have you heard that told?
03:55Yes, and I'm bringing the poet out in you, Shal.
03:59So, let's go across to Sharad as well.
04:01Sharad, trade setup this morning.
04:03Let me get your view in on it.
04:04We've got a lot of action on IT names on the back of earnings.
04:08Tech Mahindra numbers coming in.
04:10What are you making of those?
04:11Persistent also seeing an increase in profit.
04:13How are you viewing some of the IT numbers that have come in so far?
04:16Yeah, I think most of the numbers are typically showing one common theme.
04:22The deal win size continues to grow.
04:24The new larger deal wins are continuing to grow.
04:27Though this quarter, we do not have too much optimism in the numbers.
04:31They are more or less stable at the top line and bottom line level.
04:34Particularly, Tech Mahindra's numbers, I think the one thing that we are waiting for is the BFSI ramp up.
04:40So, some of the business details do show some ramp up there.
04:43So, most probably as that trajectory continues, I think we'll have more details about it.
04:48So, I think, yeah, mostly the numbers look okayish kind of.
04:52But I think next quarter onwards, we'll have much better numbers from the IT pack.
04:57The business around the U.S. most probably has not shown much improvement in this quarter also.
05:02And next quarter onwards, that should start to show up.
05:05And evaluation-wise, I think these are comfortable levels to look at IT stocks.
05:09So, within the pack, any particular favorites, Sharad?
05:12Because we had very different numbers and strategy from TCS versus HCL.
05:17HCL on its AI play, TCS on the data center play.
05:20Today, we've got Tech Mahindra also out with earnings.
05:23Where would you be looking within the basket?
05:27Within the front lines, I think I'm more confident with Infosys.
05:31These valuations, I'm very happy with.
05:33I would be very happy buying into it.
05:35I think over the next six to seven months, as the mood improves, the forward numbers will substantially improve.
05:41And in the smaller names, I think in the high growth smaller names, I think a scientist is something where we are expecting.
05:48Not science DLN, science limited.
05:50I think most of the reorganization will play out over the next six to nine months.
05:54So, that could be one spot, you know, where you could have a lot of improvement in the days to come.
05:59All right.
06:01That's the view on IT.
06:02Sharad, as Sher also pointed out, we have been seeing some amount of traction building up in PSUs and particularly PSU banks.
06:09Do you feel this is driven by some kind of reform buzz?
06:11Is it again a valuation play?
06:13Anything that you're spotting there?
06:15Yeah, I think partly reform also and partly I think the buzz started with the SBI chairman being very clear about the kind of growth and type of positioning we want to put it for a behemoth like, you know, SBI to put out targets that we want to, you know, establish a stronger brand, bank growth over the next five, six years, be among the top 10, top five.
06:37So, I think this sets the very positive tone and largely I think the MSME microfinance issue that we were facing over the last few quarters, I think that is getting relaxed.
06:49The NBFC relaxation should start to show up in the numbers as well.
06:53And valuations across PSU banks are very attractive.
06:56I think barring SPI, if you look at the top three, they would be trading at 1.1 times price to book.
07:01So, and the way we are expecting advances, growth, etc. and the NPH to play out, there is high probability they could be trading at, you know, 1.4, 1.5.
07:10So, that alone, even without not much improvement, I think there is a possibility that you might be looking at 20-30% upside across it.
07:19All right.
07:20Canning down to opening now, let me also take you through some of the other stocks in news.
07:25Satvik Green, that one's got about a 600 crore rupee order coming in.
07:29So, Godrish Properties acquiring a 26-acre land in Bengaluru with about 1,000 crore rupee revenue potential.
07:37So, that's Godrish Properties in the news as well.
07:40Lemon Tree signed a pact for a new hotel in Gujarat.
07:43Remember, tourism, hospitality continue to be an area of growth.
07:47CCI approving acquisition of JP Associate by Vedanta.
07:50So, that's something that's been in the offing, that approval coming in from CCI as well.
07:54The Competition Commission of India, watch out for JP today on opening.
07:57We're just counting down now to the opening bell.
08:00We've got Electri, Electronics.
08:03All right.
08:04Also, some breaking news coming in for you.
08:06A massive jump in the rupee value.
08:10Strengthening against the dollar rupee.
08:11Now, up 79 paise at opening.
08:14Strengthening to 88.01 versus 88.8 on Tuesday.
08:19That's a massive jump coming in on the currency this morning.
08:23Strengthening there against the dollar.
08:24Clearly, several factors at play over there.
08:27And we'll, of course, get you some deeper analysis on that as well.
08:30But a quick look at the opening ticks.
08:33And we're seeing a massive jump on the rupee this morning.
08:36Shail, this is big news on the currency.
08:38Clearly, seeing an impact on some of those global factors.
08:40Let's hope for the best.
08:48But, you know, broadly, I think a weaker rupee is good for us.
08:54But the markets are right there in front of you.
08:5740 points higher.
08:58Anything that you would like to mark?
09:00Let's take a look at the gainers and losers.
09:02They have we opened in the green this morning.
09:04Up about two-tenths of a percent as expected on the Nifty 25-200.
09:09That's where we're at.
09:10We've also got the Nifty Bank steady up about two-tenths of a percent right now.
09:15We also got Tata Motors, Adani Enterprises, Bajaj Finance, some of the gainers today.
09:20Tata Motors looking good up close to about two percent right now.
09:23Hindalco, Wipro, Bharti Airtel also seeing some steady gains coming in there.
09:27Auto, of course, continues to be a pocket of focus.
09:29On the losers end, we've got IT.
09:31So, Infi, we're still awaiting earnings on that one.
09:34Dr. Reddy's from the Pharma Pack.
09:35Sipla, then we have Titan, for instance, Tata Steel, some amount of profit booking on
09:40some of the metal majors, perhaps.
09:42And SBI Life also on the downside.
09:46Axis Bank and smattering of the financials, but the cuts are very limited.
09:50Extremely flat market on opening.
09:52Shell?
09:52Yes, Abha.
09:58But look at the way how Bank Nifty is moving today, 163 points higher.
10:04Major banks doing well.
10:06ICICI Bank, HDFC Bank in the green.
10:08Remember, these are two of the highest weighted stocks, both in the Nifty and the Bank Nifty.
10:13And it's a sea of green across the board as far as the large street is concerned.
10:171444 shares in the green, 716 the red, 19 indices are being traded out of 19, 18 are in the green.
10:27And of course, as I had pointed out, the rally is led by PSU banks, 0.6% higher on the Nifty.
10:34And I'd also like to point out, generic pharma companies will do very well in trade today.
10:41As far as advanced decline ratio is concerned, that's very positive.
10:45And the record high is on MCX.
10:48No prices progressing.
10:50It's silver and gold and copper that trading is getting reflected.
10:54In fact, all silver ETFs back in the top gainers list, Abha.
10:59Another mover today.
11:00Let's pull up ThyroCare for you.
11:02This one is jumping in trade and its earnings impact coming in for you.
11:06Remember, ThyroCare, net profit had jumped 80% to 48 crore.
11:10The firms also announced the two is to one bonus.
11:12So, eight, eight and a half percent higher in trade today immediately.
11:16And, you know, we've had healthcare as a segment also looking fairly attractive.
11:21Let me just take a look at the numbers.
11:23Net profit surge 80% revenue from operations rose 22% to 216 crore at this point of time.
11:30Sharad, I'm going to come to you on this one.
11:32You know, I don't know if you track it, but look at the reaction on the stock.
11:37And, you know, for one of the companies in the broader markets, clearly the markets are excited to see this kind of performance.
11:43Yeah, I think the business model is also very suitable for a country like India.
11:49They are trying to, you know, mix it within the value-guided basket and try to provide it at a decent price.
11:56But I think that these valuations, what are you looking at?
11:59I mean, next year, maybe, you know, somewhere around 25, 30 bucks, already clearing it 40, 41 times.
12:05So, I would not call it expensive vis-a-vis the rest of the pack.
12:09But I think, yeah, these are fair valuations.
12:12I personally am betting more on something like a Krishna Diagnostic.
12:15I think that is more on the value side of the diagnostic business, which I think is more of a requirement of the country.
12:21And there, I think the valuations are also much more comfortable vis-a-vis, you know, something like a ThyroCare.
12:28It's trading at, what, 24 times one year forward.
12:31So, my preferable choice within the healthcare pack or diagnostic pack would be Krishna Diagnostic.
12:39Okay, great.
12:39Good to see that segment, you know, building up.
12:43Let's also take a look at some other news coming in with, okay, we'll come to Hyundai in just a moment.
12:49There's a lot of action this morning.
12:50We've got banks really shooting up.
12:53I want to get, first, Shell, let's just take a look at which ones, where the action is.
12:57And then let's get Sharad in specifically on some of those talks.
13:04Absolutely, Abha.
13:04Look at Maharashtra Bank post earnings 3% higher, 56.87.
13:10In fact, the entire PSU bank space is lit with grains, if you look at it this way.
13:18We can bank a percent higher, Bank of Maharashtra 0.7% higher.
13:23And the volumes are very, very strong.
13:26In fact, all volume buzzers at the moment in the first 10 minutes of trade are only and only PSU banks.
13:34Maybe you can ask Sharad on Maharashtra Bank.
13:37The earnings were very good.
13:39And this is a very, very high beta, low ticket item.
13:43Sharad, specifically on Maharashtra post earnings.
13:461.4 times price to book, you know, TTM.
13:51And I think, as we spoke earlier, there is a high probability, you know, that next quarter
13:56onwards even advances growth should look much better.
13:59This quarter numbers have been good.
14:00The gross NPS have been around, what, 1.72%.
14:03So, we don't have a lot of problem there.
14:06And once the MSME microfinance and the NBFCP starts showing up, most probably CapEx would
14:11also contribute over the next, you know, three to six months even consumption.
14:15So, I think, yeah, this could be a good story to have 1.4, 1.5.
14:19Maybe not as inexpensive as some of the, you know, larger PSU banks like BNB, Bank of Baroda,
14:25Baroda, Canberra Bank.
14:27But, yeah, still, I think this is not very expensive.
14:30And this is a smaller bank.
14:31So, you know, they could ramp up pretty fast.
14:34Okay, let's take a look at Persistent because that stock is also moving on earnings.
14:38We've got the numbers for you.
14:40Let me just run through them.
14:426% up, markets happy with those earnings.
14:44Profit up 10.9% at 471 crores versus 424.
14:50Persistent revenue up 7.5% at 3,580 crores versus 3,580 crores.
14:55So, that's why we're seeing that jump coming in on Persistent.
15:00It's looking really good today in terms of how the market is rewarding it for its performance.
15:05Talking about earnings, let's also pull up ICICL Lombard for a quick minute
15:08and just see if that one's reacting as well.
15:11On our screens, we're seeing earnings impact coming in across Thyrocare,
15:15across Persistent, across Bank of Maharashtra.
15:18So, some of these names are definitely standing out.
15:20And there you have it.
15:21ICICL Lombard also up about 5%.
15:24Shell, this is what we've been waiting for really.
15:26We've had a whole host of market experts tell us that they're looking at earnings recovery
15:29and clearly the markets are rewarding what they're seeing.
15:36Absolutely, Abha.
15:37But you first heard it on India Today TV because about a week ago,
15:42we had marked Nippon India ITBs as the safest thing to buy.
15:47And that's turning out to be a great investment at current levels.
15:51IT will gain because many, many mutual funds have bought into these beaten down valuations.
15:58For the next three months or so, it is going to be a party for IT stocks.
16:02Again, consult an independent financial advisor if you get into ITBs.
16:06Great. Keep an eye on IT.
16:09That's the one making all the news this morning on the back of earnings as well as banks.
16:14Let me also move on to auto.
16:16Hyundai has unveiled big plans for its India operations.
16:19In its investor presentation to stock exchanges this morning,
16:22the auto major announced it plans four new car launches this fiscal.
16:26It's also said it will launch at least 22 new cars in the next four years,
16:31including eight hybrids.
16:33So, that's the latest coming in on Hyundai.
16:36Big news coming in from the counter.
16:37Not much movement today on the stock exchange,
16:39but we have been seeing auto run up overall
16:41and Hyundai being one of those top movers as well.
16:45What are you making of this announcement, Sharad?
16:47The big plans by Hyundai to really take a larger chunk of the market?
16:52Yeah, I think very positive development.
16:54Even if you look at Maruti,
16:55they are also trying to focus on the hybrid part of the business.
16:59And even after Hyundai listed hours of this view
17:01that new launches could substantially spice up
17:04what we are expecting right now.
17:06So, look at the forward earnings.
17:08I think over the last six, seven months,
17:10we have had substantial upgrade to the earnings,
17:12you know, five, seven percent.
17:14If some of these new launches turn out to be blockbusters,
17:17I think they have had some legacy models
17:20which are doing still very well.
17:22And Hyundai has an established brand here.
17:24So, the competition is getting higher,
17:26but I think, yeah, this could be an interesting watch.
17:29At these valuations, it's better to, you know,
17:31wait and watch and have a look
17:33in case some of the models do very well,
17:35then you will probably restart building positions here.
17:38Preferably, maybe, you know,
17:40around an 8 to 10 percent drop,
17:42but that would give you a much better option to get into it.
17:45So, around 20 to 100, 20, 300,
17:47you can start looking at it again.
17:49So, I think that would be a decent strategy
17:50because next year, what are we expecting?
17:52You know, 90 rupees, 90, 95 rupees kind of earnings.
17:55It's already trading at 32, 33 times one year forward.
17:59So, not much is left on the table, I think.
18:01But in case something turns out to be a blockbuster
18:03amongst the new launches,
18:05there could be substantial re-rating.
18:07So, it's better to wait and watch
18:08and buy your dips properly.
18:10Okay.
18:10Sharad, I've got to ask you about
18:12the LG listing and the pricing of it as well.
18:16What are you making of it?
18:17We've got to get your view on the mega listing.
18:20Yeah, an excellent listing.
18:23I think for a change,
18:24one of the larger issues was not price to perfection,
18:26leaving a lot on the table.
18:28But at the same time,
18:29I think at these valuations,
18:31it would be hard for you, you know,
18:32to get money out of it
18:33over the next one and a half, two years, maybe.
18:37So, if you're a long-term investor,
18:39I think certainly you can continue to hold on
18:41because the segments they are presented to,
18:43air conditioning,
18:44maybe they haven't done so well,
18:46but the other two, three consumer durable parts,
18:49they have been doing very well
18:50and are very bullish
18:51on the long-term prospects of it.
18:53So, LG should benefit out of that.
18:55But at these valuations,
18:56one and a half, two years,
18:57I think it would be difficult to make more money
18:59because next year, what are you expecting?
19:00You know, similar kind of earnings,
19:02not much growth.
19:04So, one, one and a half year might be difficult,
19:06but if you stretch your horizon
19:07to two to three years,
19:08maybe you'd still make money.
19:10So, in case you haven't,
19:11you can continue to hold.
19:12You're a long-term investor.
19:13But if you're expecting to make money,
19:15you know, over the next one and a half, two years,
19:17I think it's better to get out of LG
19:19and these valuations
19:20that you will not make much money
19:22over the next one and a half years.
19:24All right.
19:25Good call coming in there from Cheryl.
19:27Gentlemen, thanks so much for joining us
19:28on the show today
19:29and taking us through your views
19:30and a very active market opening today
19:32on the back of earnings.
19:34In a Business Today TV,
19:35Diwali Special Edition,
19:37we also spoke with Devina Mehra and Nilev Shah
19:39on their top bets this summer to 2082.
19:43Listen in.
19:43Devina, for you,
19:46which are the sectors
19:46that are looking attractive?
19:48IT, financials, defense, consumption?
19:51Where are you looking within the markets?
19:54So, we don't have any concentrated portfolios.
19:57So, I mean, there will not be a time
19:58when in our BMS,
19:59we have like 30% or 40% in a single sector.
20:04We have been overweight pharma healthcare
20:06and auto ancillaries
20:07from about the beginning of 2024.
20:09So, that still continues.
20:11We have added a few auto names along the way.
20:15One sector which has been coming up
20:17on our systems
20:18and where we have been increasing
20:19has been FMCG this year.
20:21So, we are overweight there as well.
20:24Some have been stock picks
20:26and chemicals and all that,
20:27but that you can't recommend as a sector.
20:30Banking, we are normally hugely underweight.
20:33We are less underweight now.
20:34So, we've added to banking
20:35because banking,
20:37if you look at last five years,
20:39so, 20, 21, 23, 24,
20:43all of them,
20:44Bank Nifty hugely underperformed the Nifty.
20:47The only year where it outperformed was 2022.
20:50So, it's kind of like making a comeback.
20:53So, I'm all, as I say,
20:54I'm always a very nervous investor in banks
20:57and we are not overweight,
20:59but we have added there.
21:00So, that would be broadly where we have weightage.
21:05I mean, the others would be either market weight
21:08kind of thing or lower.
21:09Any particular stocks from within the basket, Nilesh,
21:12if I had to pin you down on it?
21:13I think we own,
21:15we have a portfolio approach, Aba.
21:17So, we essentially own most of the names around there,
21:20be it Eternal, be it Paytm,
21:23be it Exego.
21:25I think these are, be it BlackBug,
21:27these are the kind of names we already own in our PMS
21:30and for our clients.
21:32So, yeah, we have a vested interest.
21:34These are not recommendations,
21:35but I think we like all of these people,
21:38these companies.
21:38They have been able to essentially establish
21:40market leadership
21:42and they have created strong entry barriers for others.
21:45Some have been able to create entry barriers.
21:47Some, obviously, it's still,
21:49there's enough competition out there
21:50and they're doing relatively well
21:51even in a competitive environment.
21:52So, I think we like this space.
21:54A PowerPack Diwali special lineup today
21:59on Business Today TV's Market Masters
22:01at 10 a.m.,
22:01catch Sunil Singhhania,
22:02founder, Abacus Asset Management
22:04and at 2 p.m., Ajay Shri Vastava.
22:06Do tune in for all the action.
22:19That's all from us for now.
22:20Thanks for watching.
22:21We'll see you next time.
22:29Bye.
22:29Bye.
22:29Bye.
22:29Bye.
22:29Bye.
22:29Bye.
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