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Beyond IT, export-oriented sectors like textiles and two-wheeler makers could benefit from improving overseas demand, says expert.
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00:09good afternoon dear viewers you're watching the business today's show with me sakshi batra this
00:13is where i get you all the closing action on the lal street first up let's take a look at
00:17what's
00:17in the corporate and the financial world markets recover from a gap down opening as investors
00:26bear early losses despite escalating west asia tensions and higher crude oil prices the sensex
00:31has now gained over 100 points now to trade around 77 700 the nifty also hovers near 24 200 mark
00:38it stocks gain metals shine bright and they're leading the gains real estate however lags while
00:44the rupee has weakened 51 per se to the day's low tcs signs a multi-million multi-year deal with
00:53abb
00:53to transform its global network operations using ai the expanded partnership marks 20 years of
00:59collaboration and delivers a secure ai-driven digital infrastructure to support abb's worldwide
01:06operations
01:08it's eltech shares surge ahead of q1 earnings due later today the company is expected to post
01:14steady year-on-year profit growth despite a sequential dip in revenue investors will closely
01:19watch ai demand deal wins margins and fy 27 guidance
01:28mcx gold and silver trades lower in session today tracking the global sell-off in precious metals gold
01:34prices clip 1000 rupees to trade at 1.43 lakh rupees per 10 grams while silver falls 4200 rupees to
01:422.18
01:43lakh rupees per kilo as easing global prices and inflation concerns weigh on sentiment
01:50and india's june cpi inflation data is due in about an hour as an informist poll indicates retail
01:58inflation could be coming at 4.3 percent that's above the rbis 4 percent target for the first time
02:04in 17 months driven by higher food prices and weak monsoon conditions
02:15us will straight away look at how the markets are doing at this point in time as we pulled up
02:20from
02:20the day's lowest points you can see it just about a minus 67 points of a gain on the nifty
02:26but we are
02:26hovering at the high point of the day and that's what is really good point at this point in time
02:30you can
02:31also see the nifty bank hovering about 0.1 percent higher in the session it's the it stocks that have
02:36taken all the limelight today now the index is up by 3.6 percent this is of course as a
02:42big relief
02:42coming in for the it stock investors as over the last one year the index has truly underperformed and
02:49there's been a recovery in the run-up to the earnings and right after tcs earnings the mood has
02:54got lifted further you can see the tcs stock is up by about six odd percent right after the quarterly
02:59numbers have come in we've also seen across the board the large caps as well as the mid caps
03:04are showing you enough and more strength in the session today so following tcs you also have
03:09infosys you have wipro hcl tech all of them rallying in the session you also have some mid cap names
03:14that are hovering higher like coforge persistent systems and some of the smaller cap it names also
03:19that are gaining a lot of ground let's actually welcome our guest on board we're joined by pankaj pande
03:24the head of research at icsa direct welcome to you pankaj good to have you with us as always
03:27i want to first take your view on the it stocks and the it sector as a whole that's again
03:33coming
03:33into limelight this time around the mood seems to be shifting from last quarterly numbers the memory
03:38of which is pretty fresh and the index had started to underperform right after the previous quarterly
03:43earnings this time around tcs numbers has in fact indicated to a breath of fresh relief how are you
03:49looking at the it sector and tcs to start off with yeah hi good afternoon shakshree thanks for having
03:57me i think see overall when we look at it as a pack see the challenge always has been the
04:02growth
04:02which has been sort of mid single digit i think this ai deflation is still sort of persisting and
04:07probably likely to persist for next one or two years but i think in this entire correction what has
04:13happened is that the it stocks are trading at extremely cheaper multiples uh but uh for us
04:19the challenge always remains on the earning side uh even for tcs the numbers were muted uh and even if
04:26i look at lta mindry numbers uh numbers were on sort of expected lines muted but expected to sort of
04:32become better so uh that is the only uh so this what we are sort of looking at that the
04:38numbers or
04:39probably the margin profile is expected to become better but is it going back to seven eight percent
04:44kind of a dollar revenue growth probably still some time away but uh yes one can look at buying the
04:50stock uh because of the cheaper valuation but i think uh one needs to sort of buy it stocks from
04:55a
04:55two or three year perspective i think that is extremely important because uh we don't expect a v-shaped
05:01recovery in the earnings for most of the it companies the like i said the only thing favoring is the
05:06cheaper uh valuations for for example tcs is trading at about 13 14 times on a forward pv multiple
05:12basis which is cheaper than some of the commodities as well absolutely you pointed out absolutely right
05:18when it comes to the kind of cheaper valuations that exist also these stocks in the run-up to the
05:22q1
05:22earnings have already dropped by about 40 50 percent from their all-time peak as well so in terms of
05:28the pecking order how would you really place your favorites uh would it be the mid caps that have
05:32usually outperformed the earnings quarter and the sentiments around it or will it be large caps
05:38this time so our sense of that when we look at uh tier one versus tier two companies i think
05:44tier two
05:45companies are better placed even for a company like lti mindry for example companies guiding for doubling
05:51of their revenues by 2030 which implies a growth of about 15 odd percent similarly for persistent we are
05:57looking at double digit kind of a growth rate and same is the case with coforge uh so i think
06:03these
06:03companies are better placed although the multiples for these companies slightly higher but india always
06:08has been a growth oriented market and i think tier ones uh probably will take a lot more time to
06:14sort
06:15of maneuver because you need to really reskill your workforce plus i think uh the kind of uh changes
06:22what they need to bring about is far more uh challenging for them i think these are doing
06:27slightly different in terms of uh putting up a capex uh for a gigawatt kind of a data center so
06:32that is
06:32the interesting thing but much details hasn't sort of come out uh so we prefer tier two players
06:38that they clearly are already mentioned compared to tier ones tier two players are looking better than
06:45the tier one companies at this point in time and the it sector is concerned but valuations are
06:49definitely attractive at this point in time uh taking the breaking news on your screens viewers
06:53this is with regards to the india u.s trade talks the trade secretary has talked about how the talks
06:58are progressing well uh the framework trade deal is ready he says also are talking about how trade
07:04negotiation is progressing very well the trade deal could be signed at the right time and india and
07:10u.s are on the same page the trade secretary also has said that there are no challenges in the
07:16u.s
07:17trade uh talks with india let me go across to my colleague uh karishma who's been tracking all of
07:23this very closely karishma uh this sounds uh good news uh india and u.s seeming to be on the
07:28same page
07:29when it comes to the trade talks that's what is uh the trade secretary saying he's also saying that uh
07:34you know we could be seeing the right time for the deal to be signed how do we understand what
07:38the
07:38right time could be if we are very close to signing of the deal now
07:44well uh it's actually in fact the right time that we are betting big on is before before july 24
07:51when
07:51the section 301 of the u.s trade act uh tariffs that have been imposed which is about 10 to
07:5812.5
07:59percent baseline tariffs on various countries including 10 on india will cease to exist and
08:04you're expecting that something to could come in in the next 10 days because the u.s has been keen
08:11to have at least an interim agreement or an interim deal that could be signed before that however to
08:19clear the air the government has put its best foot forward and have gone on record to say that both
08:26the countries are in conversations and while the aim is of course to get a preferential treatment out
08:32of this it is also to have a fair and balanced deal okay thanks a lot karishma for getting us
08:37those details there is also another breaking news coming in on your screens viewers this is with
08:42regards to the trade data that we have the june exports have risen 15.5 percent year on year
08:48to now cross 40.4 billion dollar mark we are also seeing june imports have also jumped 31 on a
08:56year on year basis and the imports stand at 70.84 billion dollars of course the trade deficit continues
09:03to widen uh 59 on a year on year basis and the trade deficit right now stands at 30.4
09:10billion dollars
09:11as well so of course we continue to see even though the exports are rising the trade deficit has also
09:17widened at this point in time but let me go across to pankaj pankaj are you looking at the export
09:23oriented spaces uh the entire last quarter last four months uh you know there's been so much of
09:28volatility and uncertainty around the export oriented sectors because of the geopolitical tensions
09:33uh the talks regarding trade so much of protectionism is happening on various countries
09:38uh are things looking up there or are you still very cautious on that space
09:44so i think between the domestic and export oriented themes actually uh overall the preference is more
09:49towards domestic oriented themes because uh globally things are still a lot more volatile
09:54not only from the market perspective but also even uh from the logistic perspective as well but
10:00our sense is that some of the key export oriented sectors like say for example textile are about to
10:06sort of turn so while you one may not be really great but from q2 onwards our sense is that
10:12things
10:12will start becoming better i think a lot of companies especially on the textile side have
10:17uh are sort of pouring into newer market markets so that should sort of help and i think one more
10:23segment which is doing exceptionally well is on the auto side uh when we look at the uh two-wheeler
10:28players especially the likes of baja auto tvs and dash i think for them last one year or one and
10:35a half
10:35years the export numbers have started to sort of look a lot more better so which is why we like
10:40even the two-wheeler manufacturers as well from export perspective yeah
10:46okay so the two-wheeler space and textile space look interesting when it comes to the exporter
10:51oriented sectors but uh largely the tilt is towards the domestic oriented economy uh stocks and sectors
10:57at this point in time uh let's also look at defense space as a whole india could be preparing in
11:03fact for
11:03a major shift in its defense manufacturing policy the center is reportedly considering opening missile
11:10production to private companies with the drdo developed astra mark 2 missile likely to be the
11:16first project the move is said to be aimed at meeting rising domestic and export demand while also
11:22boosting indigenous defense manufacturing as well so how significant could this policy shift be and
11:27what might this mean for india's infrastructure defense sector let me go across to my colleague
11:32shivani sharma who's been tracking this entire story for us shivani this seems to be very big when
11:37it comes to changing the policies and it seems to be a big booster for private companies largely
11:44how do you explain what kind of an opportunity could this present the last few years have been
11:50transformational especially when it comes to defense and opening the sector for the private companies now
11:56in the missile sector the reports are indicating that the ministry of defense can issue a rfp
12:02for astra mark 2 missile production which is a new generation uh missile air-to-air missile system that is
12:10integrated with the uh fighters of the indian air force be the lca the the mic 29 the c-30s
12:18and also we know that uh recently when prime minister narendra modi was in indonesia we were talking about
12:26astra missiles cooperation so when this sector is opening up now for the private players be the
12:32there are a number of companies that are at uh under this uh whole uh procurement process so it could
12:39be uh bharat forge it could be adani it could be multiple other countries that are in that race uh
12:45sakshi but certainly a big move from the ministry of defense and if this sector opens up the procurements
12:51will be getting faster there will be a lot more opportunity uh for the missile sector especially in india as
12:57india is looking forward to enhance its uh indigenous skills when it comes to the production
13:02of missile systems absolutely thanks shivani for getting us all of those details this calls for a
13:07good discussion now we have pankaj with us pankaj defense sector as a whole we do know from last couple
13:13of years this is being seen as one of the sectors that nobody is able to ignore of course there
13:19was a
13:19period of a sharp vertical rally then a long form of consolidation that took place but the kind of
13:24order flows that the entire industry is getting and now how the sector is opening up there are various
13:29policy changes that are at helm that could push domestic manufacturing that could push for a positive
13:35moves for the private sector as a whole how would you as a market participant be able to
13:40select that as a long-term opportunity and what should retail investors do here
13:46so our sense of that defense is a 40 lakh crore kind of an opportunity which is going to unfold
13:50in
13:50the next 10 15 years and when i look at last year the acceptance of necessity has been given to
13:56nearly
13:5619 or 19 and a half lakh of a worth of project and when you look at the psu uh
14:02companies typically
14:03their order book to bill is already significantly higher so i think if you have to really execute it
14:08you need to sort of invite private players and which is what the government has been doing
14:12uh which is why we believe that uh it's an opportunity not only for the psus but even
14:17private sector as well for years to come i mean just to highlight that uh for air force
14:23htl was considerably the only company now for fifth generation aircraft you will see probably private
14:29players also sort of pitching in so i think defense is uh the only challenge with the defense
14:35companies whether it is psus or public is the uh is the rich multiples the sector commands but from
14:40opportunity perspective i think things are looking quite good i think this is one of the few sectors
14:44which can deliver and heighten kind of a growth both on psus and private as well i think one needs
14:50to buy it from a three or plus perspective given the fact that the valuations are rich but we like
14:55both combination of psus plus private here you have private companies like solar industry data patterns
15:01we have initiated coverage on zen technology so i think these are the companies which are looking very good
15:06uh even astra microwave okay so the likes of astra microwave solar industries zen technologies all of
15:14those are preferred bets when it comes to the space within the defense pack as well let's also shift focus
15:20to uh big investments coming into our states uh from international players and countries spain's
15:27summer is going to be investing 19 000 crores in madhya pradesh two billion dollars worth of investment in
15:32mp especially when it comes to the semiconductor sector these investments are going to be focused
15:38on there are projects to generate around 5000 direct jobs summer is going to be getting 15 acres
15:44for the data center project investment has been announced at the mp tech growth conclave as well
15:49so big money is coming into various states that are also stepping up uh their investment plea when it
15:56comes to newer technologies like data centers ai at large as well and they are now attracting uh you
16:03know investments from various countries now when it comes to india's own major ai and data center push
16:09up to you um you know a lot of retail investors come up with the questions these days on our
16:15platform
16:15asking where are the opportunities to invest in ai where are the opportunities to invest in data centers at
16:21this point in time india or indian listed space may have very few uh companies that are just pure play
16:27ai or pure play uh you know data center play but there are so many companies that are foraying into
16:33this space um you know looking at the next decadal kind of an opportunity that could be coming in
16:38are you also spotting that for your clients at this point in time and what are you advising them
16:43so from my ai or data center perspectives actually we don't have direct companies especially on the chip
16:49side or listed companies on the design side i think one proxy way to sort of play on the infrastructure
16:55side or infrastructure creators for uh for data center now you could have real estate companies
17:02something like say lodha or others sort of looking attractive there in addition to that power is a good
17:09proxy for data center because somewhere down the line if you are going to see more of ai build out
17:16happening
17:16especially ai data centers and you need a lot more power requirement for the same so power becomes a
17:23good proxy in power again uh so generation is not a challenge for us it is the transmission and
17:28distribution i think this is where probably uh you would have companies like uh power which looks
17:33attractive to us now within power also you have various dimensions right from solar to nuclear so for
17:38example for nuclear we feel that heavy forging can be undertaken by companies like dhen plus lnt
17:45or you could have smaller component players like say for example in nuclear you could have companies
17:51which make customized pumps say something like asb so you have a whole lot of companies which uh can
17:57be a good proxy play for this entire data center as a play but sadly we don't have a direct
18:02uh
18:03company like what you see there especially in global markets like say south korea or us
18:07absolutely so we may not have the direct opportunity viewers but how pankaj is guided is that look at
18:14the proxy play the ancillary play that will really help you garner all that growth opportunity that
18:20you are aiming to uh provide your portfolios and edge with as far as the ai data center semiconductor
18:26new age tech story is concerned but let's also try and understand what are also fund managers talking
18:31about on it sector as a whole my colleague shell but nagar also caught up with josh thomas fund manager
18:37at quantum amc on why the fund remains positive on id sector at this point in time and how ai
18:43could
18:43actually create the next growth cycle for indian it we haven't changed our allocation to the
18:51it segment or the largest players the only change which you could be seeing is because of the change in
18:59uh the share prices the quantity has not changed as such so we are uh positive on the it segment
19:06for
19:07uh for a couple of reasons one the indian it players they are not meant to be innovators uh in
19:14terms of the it service players so in every technology transition phase uh even in the past we have seen
19:21that when the transition happens and when uh when the bulk of the value change shifts to uh innovators
19:31like uh the large language models at this point uh at those points in time uh the indian it service
19:38companies see some bit of moderation uh in in in their uh growth profile because they don't participate in
19:47that phase of of technology transition where they try and participate is is when the new technology
19:54reaches mass adoption so if anthropic or chat gpt were to be rolled out to millions of thousands of
20:02enterprises that is when indian it service players come into foray and these are not plug and play
20:09uh solutions all of them have existing technology landscape so they would have to uh understand how
20:17the new technologies interface with the existing ones and that that is where the indian it service players
20:23remain uh prominent for that to happen uh one of the measures in which the compute or the cost of
20:31the new
20:32technology is measured is in terms of the price for each stock and just like uh headcount
20:38this is a norm for measuring the cost in many enterprises so to gauge the cost of some of these
20:45newer technologies you track the cost of uh tokens so if you look at the cost uh the dollar cost
20:53per
20:54million tokens that has moderated a bit uh in the recent months but it still remains elevated to where
21:01it was a uh it was where it was a year ago because purely the chip prices the gpu prices
21:07are
21:07continues to be uh fairly elevated uh so there will come a point when those token prices are conducive
21:14and that becomes uh probably uh cheaper than adding more uh labor or on the existing labor can
21:22have better productivity with with all these newer technologies that is when we would see a good
21:30rally in in some of these names and and this the segment overall all right view as we look at
21:37the
21:37market closing and then after that we will take up your questions also with punkage but first up on
21:42the nifty flat absolutely as flat can be 24 207 for the nifty um near the high point of the
21:50day but
21:51we've just managed to end absolutely flat the nifty bank a one tenth percent higher at 58 131 you can
21:58clearly see that of course when we look at the it sector that's the top mover in terms of the
22:03sectoral
22:04gains 3.6 higher and it's managed to again end near the high point we've also had auto stocks private
22:11banks also gain ground today and apart from this we've seen broadcast broad markets like mid caps and
22:17small caps also show us just about flat to a positive bias kind of a move but india wicks has
22:23rallied by
22:23eight and a half percent yet again some more fear uh coming in or cautiousness into the markets that you
22:28can clearly see eight and a half percent higher for india wakes let's pull up uh the top movers on
22:33the nifty and then we will pull up the top gainers from the nifty 500 list as well there are
22:39some
22:39exciting names there let's first see the top movers on the nifty you have tcs hcl tech tech maindra not
22:44too difficult to understand because it's the it stocks that have managed to pull up all the gains
22:49today but charge auto and ntpc also gain about two two and a half percent age but nifty 500 movers
22:55you
22:55have very interesting names there you have just dialed that's up 20 percent you can clearly see
23:01after the earnings and the management change announcement the stock has moved up probably
23:05the single highest gain in a day that we've seen in the last two years for the stock as well
23:09if you know payments bank pp ap automotive that's another one that's also on the move you could also
23:15see clearly names like new gen software gna axles those are the kind of names kalyan jeweler is
23:20another day of a smart move of seven percent odd epigral c info systems these are all the names
23:26that have rallied in the session today smart moves that can be seen in the broad markets today but
23:31let's go across to our guest and take your questions now pangat we do have some questions
23:36coming in from our viewers uh prateek sina from delhi has the first question for you and he says will
23:41the rally in the it and tech stocks continue so i think very difficult because uh uh none of the
23:49it
23:49companies are guiding for double digit kind of growth only few companies are sort of standing
23:54out and guiding for double digit growth and which is why it needs to be bought it from a
24:00two or three year perspective because our sense is that uh when we sort of implement these enterprise
24:05level ai solutions the role of it companies will become a lot more important now whether that role
24:10starts in fi 28 or fi 29 we don't know because we are still getting the newer versions of these
24:16platforms uh so uh i think any company which is guiding for double digit growth is a preferred pick
24:22say companies like persistent uh ltm or coforge uh so in a fact to add one more name probably for
24:29sources also waiting for under but this kind of approach so one needs to be selective in it
24:33just don't rush into buying as of now okay swapnil mukerji from kolkata says i'm not
24:40very sure about oil and paint stocks right now is it still safe to invest in these companies because
24:45there are a lot of volatility and volatile times right now we are living in
24:50so our sense is oil given the fact that new players have come in the market so should ideally be
24:56structurally lower one year down the line which again is good news for most of the paint companies
25:03we like asian paints because see companies like asian paints have already taken the price
25:07high required for the volatility in crude oil prices and volume growth is expected to be in high
25:13single digits so from that perspective i think it's a good buy at current levels and can be headed
25:19even from a portfolio perspective as well uh one more name if i have to probably add is a bit
25:24light
25:25okay got that uh we also have tarun gaur from mumbai asking you uh which sector of these two looks
25:31more attractive right now from the consumption basket fmcg or qsr actually i don't like both of them uh
25:38fmcg perspective that the volume growth is uh is still mid single digits so in fmcg you can be really
25:46selective in terms of uh some of the names like say tata consumer uh marico which have got a good
25:53the
25:53food the basket contributing to their overall top line in qsr our sense is that the competition is
26:00still higher with players like amazon or even flip card offering cashback so i think this uh so whenever
26:06a sector or a segment competes on prices i think investors should uh sort of uh watch it uh only
26:14and
26:14not really sort of change the uh sector uh that part of time all right okay thank you so much
26:20pankaj for being with us on the program and of course giving us uh all your insights on markets
26:24addressing the queries of our viewers as well good to have you with us viewers in case you do have
26:29questions about the stocks in your portfolio your investments in mutual funds your gold related
26:33questions then you can send us your queries on the number that's flashing on your screens with that
26:38it's a wrap on the business today show but stay tuned as india today continues its coverage
26:42and we will be tracking the markets tomorrow morning at 9 a.m again
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