00:00 Good morning and thanks so much for tuning in to The Trade Setup. I'm Neeraj Shah. It's Monday morning.
00:03 And remember, it's a week that doesn't have too many global data points, save for the big one on
00:10 Friday, on the weekend, or the Thursday, Friday, which is the Jackson-Wolf Symposium. Dope. So
00:16 therefore, global weakness kind of playing in without too many cues. First, the news flow,
00:21 Nasdaq fell for a fourth consecutive day, but the Dow ended flat, which is a good part, and the
00:27 futures as of now are steady. Bitcoin broke below the $26,000 mark, posted the worst week since May.
00:34 Wheat has risen after a series of drone strikes in Russia over the weekend.
00:39 And in other news from an India perspective, and corporate perspective, big news that the
00:45 Murugappa Group has said that a dispute between the family branches have been settled. This is a
00:51 big standing large group in South India and a lot of listed stocks. And now they're saying that the
00:57 disputes have been settled, which is actually a really good sign. So that's the news flow. Now,
01:03 the US market, like I said, Nasdaq was certainly in the red, but the Dow ended marginally in the
01:11 green, which is not a bad sign. Like I said, the futures are trading OK, but the yields continue
01:17 to be an issue. 4.26, 4.27, yes, 4.27. And the dollar index too, 103.29. So almost as if the
01:26 last one and a half months, we did nothing and came back to the levels that we were there maybe
01:31 two months ago. The gift Nifty indicates a flattish start maybe, and that is to be anticipated 0.09%.
01:40 So it doesn't matter. It's right in the cluster of supports, the Nifty really. Let's wait and watch
01:46 if it kind of finds one. So what happened on Friday? The Nifty declined 55 odd points to close
01:53 at 19310. The broader indices ended negative. The Nifty mid-cap 100 was down 0.21%. The small cap
02:00 index was down 0.53%. And the Nifty PSU Bank actually gained the most despite the fact that PNB
02:07 was overall the top loser in the Nifty 100. But PSU Banks, like I said, continue to find favour.
02:14 In fact, you know, it's a telling statistic, viewers, that since November 2020, or yeah,
02:23 let's get out of this play. But since November 2020, you'd be surprised I was, the Nifty PSU
02:30 Bank index has actually done better than the Nifty Private Banks. It's quite a telling statistic.
02:38 We all ignore, so many people have ignored PSU Bank saying, oh, they can't do well, the Private
02:42 Banks will do well. As an index, the PSU Bank index has actually done much better. Some bit of
02:47 these details are in the note written by Dr. C.K Narayan in the weekly newsletter that he writes
02:52 for us. I've, of course, gotten that statistic from that very note, excuse me. But it's a statistic
02:59 worth noting. So what's the trade setup there for an annual like this? Indices have been falling for
03:06 four consecutive weeks now, which is a mild negative sign. The highest put OI is at 19,300
03:13 strike, which is immediately the support that we are at. And it remains the key support level to
03:17 be watched out for. And you know, I've been saying that it's not a market to go short on. And somehow
03:23 we've fallen, we've not cracked. Therefore, I don't think short people have made too much of money.
03:28 But while quant indicators do indicate that it's time to accumulate, many smart investors that I
03:33 speak to have been raising cash levels as well. So, you know, it's a different kinds of investors,
03:42 of course, and the people who are raising cash levels might also, you know, find it difficult.
03:46 It might perform, it may well happen that some of their stocks have done so well that they're booking
03:51 profits in risk in those respective names and raising cash levels to benefit from potential
03:57 market fall. But I have no idea. My limited point is all indicators that I look at point towards
04:03 that this is not the time to go lever and short. Who knows? Metals remain a sore spot. They remain
04:09 a sore spot in Friday's session as well and might continue to do so. Failing China's unless China
04:16 kind of gives a stimulus of sorts because that growth numbers out there are looking very,
04:20 very wobbly. However, if you look at specific pockets in front, cap good stocks are still the
04:26 ones in play. It's a big day today. Geo from a Geo financial services perspective lists today
04:32 the direct price of two sixty two rupees per share implies valuation of four book.
04:37 At one point, nine times price to book now, it'll be interesting to see how it lists. And,
04:44 you know, at 10 a.m. today on Talking Point, we have a better one who, as I've spoken to him over
04:50 the weekend, has done some serious amount of work on Geo financial services. So when you launch in,
04:55 when you log into Talking Point today, we will discuss the Geo financial services listing and
05:01 how should people look at it from an individual perspective as well. So keep that in mind.
05:07 Now, stocks to watch in the session today. Actually. So just before we get to stocks,
05:13 to what here's my limited point when it comes to Geo financial services, everybody's talking about
05:17 it. I think people expect that over time that stock will do well. It would be difficult to
05:24 call it out right now as to what will happen to that stock today. But like I said, if you want
05:29 some answers and if you if you were wanting some answers from me right now on GFS, I would recommend
05:37 or I would request that try and log in at 10 a.m. when we've somebody who's looked at it closely.
05:42 And therefore, there are two people, one from an interviewer angle who is looking at it closely,
05:47 one from somebody who invests, has looked at it closely. And therefore, there will be a
05:51 better response to what would happen to GFS. So please keep that in mind. Stocks to watch today.
05:57 Gujarat Gas plus the ceramic tile players, because Gujarat Gas has increased the price
06:03 for ceramic customers in Morbi by two rupees per SCM to about 40 rupees, 40.5 rupees per SCM. Now,
06:12 this is the first time since October 2022. This naturally would be constructive for Gujarat Gas
06:19 and will help the stock. I reckon this will also be negative for some of the ceramic tile players.
06:24 So do watch out for the Kacharyas and some of the others, opposing cues for both of those. So
06:34 but this is an important pocket to monitor. Then the news around Titan, they will buy about 27
06:42 percent, 27.18 percent stake in Carat Plain from founder for 4621 crores. This will raise the
06:48 company's total stake in Carat Plain from 71.49 percent to 98.28 percent. Now, just before I get
06:56 to my alert, which is important, yes, but here's the deal, something that you might not know.
07:02 And I got to know it from somebody. So I thought I'd bring it to you. When Titan invested in this
07:09 piece for the first time, Carat Plain for the first time in 2016, they invested in it, had a
07:16 576 crore valuation. From there, Carat Plain is now 17000 crores. That is some value creation,
07:27 isn't it? Quite something. 17000 crores. That's some serious wealth creation that has happened
07:33 there. And imagine the initial investment was 576 or Carat Plain promoter sold the initial stake at
07:39 576 crores. The final stake is sold at eight times that initial stake valuation. Quite something.
07:46 And the overall business valuation, of course, as I said, multiplied. Now, the other thing is,
07:49 it's not as important news for Titan to my mind as it is for what it means for the upper end
07:57 discretionary stocks, because for FY23, the turnover of Carat Plain was 2177 crores,
08:04 which values the now of the company at 7.8 times FY23 sales. That is quite something.
08:14 Just shows how many fewer, how few an assets actually there might be there, or just that
08:21 Titan has comfort with this, this is not a benchmark valuation. But if Titan was willing
08:25 to play this one and Titan is a smart company per se, a lot of other upper discretionary stocks
08:32 might be in focus. So we'll try and talk to some of these over the next few days, the ethos,
08:37 the landmark cars, the Sula vineyards, and try and figure out what is happening at the upper end of
08:42 the spectrum. Adani Ports is in focus, GQG Partners has acquired an additional 2.2 million shares,
08:48 raising stake to over 5% at 5.03. And now, you know, GQG has bought stakes in all of these
08:57 Adani Group stocks in the recent times. So this doesn't surprise, but it is a shot in the arm for
09:01 Adani Ports, you have to keep that in mind. A standard disclaimer, of course, the Adani Group
09:06 via Adani Media Networks, AMG Media, that is sorry, currently owns 14% and has ended in MOU
09:13 for acquiring the remaining stake and Quintal Business Media will become a wholly owned
09:17 subsidiary of AMNL. And that is the platform on which you are watching this broadcast,
09:22 just that standard disclaimer. KSE International has secured new orders worth 1000 crores,
09:27 1007 crores, maybe the stock reacts a bit. BNB Housing Finance has recovered corporate
09:32 non-performing on worth 784 crores. This should help the stock sentiment today, I reckon.
09:37 Deere's, the Global Escort Tractor major shares, still about 5.3% on Friday because investors
09:45 question how will some of the tractor sales continue on? This might be true in a global
09:49 context, maybe in Indian context, it might be not. But because Deere shares, still 5.3% on Friday,
09:56 it may have an impact on M&M as well as a sports quota. So do watch out for that.
10:00 ONGC has got a three-year extension to explore South China Sea oil block. So that stock could
10:05 be in focus. Since we are talking about consumer discretionary, I thought the MK Note on consumer
10:10 discretionary and takeaways from the investor conference was interesting. They say that
10:14 unlike QSR and APRA, which are facing growth moderation, discretionary categories of
10:21 electronics and jewellery are growing in excess of 20%, explains the Caraclay transaction.
10:26 Their observation is that the mid-cap regional players at electronics, smarts and other division
10:31 are outpacing national players in their geographical space with good unit economies.
10:35 As with Dixon and Amber, those retailers are outdoing OEMs on growth and profitability.
10:42 Then they say that Senco Gold, like Deere, continues to see robust footfalls in transactions
10:47 and expects a bright festive season. So just some dope on consumer discretionary.
10:54 Then amongst brokerage notes, viewers, I haven't given that note maybe, but what stood out for me
10:59 amongst other notes is this note from Jefferies on the graphite electrode majors. So they say
11:10 that decarbonization is a medium-term catalyst. They say that they have retained a buy
11:19 on these stocks and they have upped the target price and the target multiple for both
11:26 HEG and graphite, I think 515 and 2170. So on HEG it's a buy, the target price is 2170
11:37 from 1460. On graphite India, it's a buy with the target price raised to 515
11:44 from earlier target price of 420. So keep that in mind. They're saying that they are
11:51 export-oriented players benefiting from the rising adoption of EAF. HEG's Q1 beat the
12:00 Jefferies estimates as well, but beyond the near-term hiccups, decarbonization is a strong
12:05 catalyst. EAF production by 2030 could rise by 100 million metric tonne entailing potential demand
12:12 of 200 KMT for electrodes. So they like these stocks. So do watch out for graphite India and
12:22 HEG as well. Those are a few that I thought were important. Maybe they've missed some,
12:27 so please excuse me for that. But thanks so much for tuning in to the trade setup. At 10 a.m. today
12:32 on Talking Point, I'm Ape Agarwal of Piper Serica and we'll talk about JFS in detail. By the way,
12:37 my colleagues Alex and Hiral at 8.30 will talk to somebody on JFS listing as well. So we'll give
12:44 you some dope pre-market and a lot of very interesting dope post-market on JFS. So thanks
12:49 to be watched out for. By the way, with Abhay, it won't be just about JFS, it'll be lots more.
12:54 RC Bhargava of Maruti Suzuki on BQ Conversations at 12.30. It's a conversation that you can't
13:02 afford to miss. Lots of conversations with him on autos and Maruti. So try and tune in for that as
13:08 well. And the usual Trade Talk conversations at 11 and 3.15 as well. Thanks so much for tuning
13:15 in to the trade setup today. Have a great week ahead.
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