- 7 minutes ago
Indian benchmark equity indices closed higher on Friday, with the Nifty closing above 23,000 and the Sensex trading near 74,500 despite crude oil prices crossing 118 dollars a barrel. IT and pharma stocks led the gains, while mid and small caps faced selling pressure. Other major domestic developments included the Cabinet Committee on Security clearing an over 40,000 crore rupee project for eight next-generation stealth corvettes to be constructed by GRSE and Goa Shipyard Limited with more than 70 percent indigenous content. Additionally, Finance Minister Nirmala Sitharaman defended the IDBI Bank stake sale, highlighting previous recapitalization efforts, and Walmart initiated an internal investigation into alleged kickbacks at Flipkart. Market experts discussed corporate earnings, rising crude prices, aviation challenges faced by IndiGo, and investment outlooks for Samvat 2083 across equities, fixed income, and gold.
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NewsTranscript
00:02Good afternoon viewers, you're watching the Business Today show.
00:05I'm Sakshi Patrakh getting you all the closing action on the LAL Street.
00:08First up, let's take a look at what's hot in the corporate and the financial world.
00:14Markets trade higher despite crude oil prices surging past $118 a barrel and a weak global backdrop.
00:19N6 is up 350 points to trade near 74,500.
00:23The Nifty gains 100 points to trade above 23,000.
00:27However, mid and small caps remain under pressure.
00:33Indian IT stocks are bucking the trend with TCS InfoCisco port surging up to 5%
00:38and even as AI-linked stocks extend losses worldwide amid concerns over big tech's rising,
00:45AI investments and Intel's weak sales outlook.
00:52The Cabinet Committee on Security chaired by Prime Minister Modi has cleared a 40,000 crore
00:58rupees-plus project to build eight next-generation stealth corvets for the Indian Navy.
01:04The defence sources have indicated that the warships will be built by GRSE and Goa Shipyard,
01:11limited with over 70% indigenous content.
01:17Finance Minister Nirmala Sitaraman has defended the IDBI bank's stake sale,
01:21asserting that all due process was followed, hitting back at Rahul Gandhi.
01:24She has also said the Modi Sarkar has revived the bank through recapitalisation of over 25,000 crores.
01:36Walmart has reportedly launched an investigation into alleged kickbacks worth over 150 crores
01:41involving Flipkart employees in its smartphones and luggage divisions.
01:44This marks the third internal probe into alleged financial misconduct at Flipkart in less than three years.
01:59All right, viewers, we'll straightaway look at welcoming Gaurang Shah,
02:02Senior Vice President, Jojit Investments, to share with us a fresh take on the markets.
02:05It's about 17-odd minutes to go before the markets start shop,
02:08but it's panned out to be a strong day of trade
02:10after carrying through what transpired even in the last half of trading session yesterday.
02:16Gaurang, good afternoon. Good to have you with us.
02:19The gains are limited from some sectors like IT, pharma, financials to an extent.
02:24A lot of stock-specific moves that we are seeing on the back of earnings that are coming in.
02:29How are you looking at the current market setup?
02:31We are back above 23,000.
02:33Will it mean that the festive cheer will soon be upon us?
02:39Hi, Sakshi. Thank you so much for having me on your show.
02:42Good afternoon to you and to all your viewers.
02:44Yes. So, sometimes you don't have to question the logic of the markets, right?
02:51Because crude oil is that it's the short-to-be-dimptom all-time high.
02:56Situation is precarious as well as Middle East geopolitical situation is concerned.
03:01And despite the fact, over the last three days, if I'm not mistaken,
03:03we are maintaining a positive move on the markets.
03:07And thankfully, today is Friday and up till now, we are maintaining that positive move.
03:12And hopefully, by the time we end this trade, we should close in a better situation.
03:16So, my sense, Sakshi, is that maybe coming next week, you might have some odd days of profit booking
03:21because of the market move in the last three days.
03:25The market has moved up quite significantly and smartly.
03:27So, maybe short-term traders would want to, you know, they would be tempted to book profits.
03:31You might see some consolidation.
03:33Let's hope that the momentum on the positive side continues.
03:36And if this is the way we close, and if we're able to maintain these levels next week,
03:43then you cannot rule out.
03:44Once again, we might retest 23,200 to 23,300.
03:52Okay.
03:53So, IT stocks at the forefront of the gains that we are seeing yet again, 2% higher.
03:58What we are seeing transpiring in the global, you know, tech space, AI-focused space,
04:04again a sell-off coming in.
04:05I mean, Gaurang, repeated incidences like this, what do they point out also?
04:10Earnings weakness from such global tech giants, what do they point out to?
04:14You know, have the stocks globally run ahead of fundamentals?
04:18Is there too much of expectation from what AI could serve in the near term?
04:22And therefore, are our traditional IT stocks getting back in thick flavor?
04:30So, we've discussed this earlier as well, Sakshi, and I have also maintained that at Jujud,
04:35and of course, let me give a standard disclosure, Sakshi, which is mandatory.
04:39Otherwise, I'll be pulled up by my compliance team.
04:41That all recommendations that I'll be sharing with you this afternoon, I'm sure,
04:44they're part of our fundamental system recommendation for all the point of view.
04:48Our company, Jujud or myself, we do not have any kind of personal investments,
04:51no financial interest, no conflict of interest, but we share similar investment ideas with our client.
04:55They might have their interest.
04:56So, even when the tide was against IT, and there was a hue and cry about concern on the earnings,
05:02and how negatively Indian IT companies will get impacted because of the innovations, tools, platforms
05:10that are regularly getting introduced.
05:12And this is one of the sectors which is vulnerable to that kind of innovation
05:16and introduction of tools and platforms.
05:19So, while AI companies in US, Japan, China, and South Korea have run up ahead of their time in valuation,
05:28and most of these companies, Sakshi, have invested a lot also.
05:31So, reality had to sink in, and that's what is happening over there.
05:35But over here, I think there was and there is a very calculated move by the Indian IT companies
05:40as far as AI investment is concerned.
05:41So, step by step, as they are venturing into it and they are getting success,
05:45they are investing, whether it is acquisition of companies or whether it is increasing the headcount.
05:50We still remain positive on the entire IT universe, be it small cap, mid cap, or large cap.
05:55Okay. Let's also focus on some of the consumer-oriented companies as well.
06:00Well, Asian Pains also came out with the earnings.
06:02In fact, we did speak with the management as well on the Q2 earnings,
06:06where we've seen growth on the top line, growth on the bottom line,
06:10but there's definitely pressure on the margins as well.
06:13Now, Asian Pains management did talk about their pricing strategy
06:15amid the persistent input cost pressures.
06:18And in this exclusive conversation, Amit Singhal, the MD and CEO,
06:21spoke about the company's Q2 performance, the growth outlook,
06:24and whether H2 will be better than H1 as well.
06:27Let's quickly listen to what you have to say.
06:30Overall, we've taken about a 7% price increase in quarter 1,
06:34a 5% in quarter 2.
06:35We were given another 3.5% price increase in November in terms of what is in.
06:40And we deliberately kind of looked at saying,
06:43last three months, we've not taken any increase
06:45because we wanted to kind of see that we would not put any pressure
06:50on the consumer demand at this point of that extent.
06:53And therefore, as we kind of go forward,
06:55I think this is a constant piece which we are observing in terms of saying,
06:59what are the kind of cost savings we can get?
07:02What are the other imperatives which we can put
07:04so that we can keep on looking at calibrated increases
07:07even if further it is required to that extent,
07:10which is going on to that extent?
07:11So I would kind of say that there is no band of an increase
07:15which we can specify, but possibly, as we kind of keep on doing,
07:18we would kind of keep on seeing that how much we can kind of take
07:22and how much we can balance from the cost initiatives we are taking.
07:25I think today, the overall brand has the power
07:28in terms of taking more increases in terms of going forward.
07:31And that is something which we will continue to balance
07:33so that the top line kind of growth initiative
07:36in terms of what we have taken is intact.
07:39Gaurang, let's understand this from you.
07:42You pointed out that crude oil prices above $118 a barrel
07:45is going to be a concern, especially for such companies like Paint
07:49who directly use crude as the input cost
07:52and have been dealing with how much pricing power to utilize
07:56and keep raising the prices without compromising
07:59on the consumer demand as well.
08:01And that's perhaps also leading to some margin cut here.
08:04With the rising competition back home,
08:07that has been a talk with Asian paints.
08:08No doubt that it is a market leader for so many decades.
08:12But with Billah Opus pumping in money, expanding its presence,
08:16there is a question mark as to whether there is going to be a shift
08:20in the market leadership that we are going to see substantial giveaway
08:23that Asian paints will have to give.
08:25Or how would you read into the paint industry at this point?
08:28What should investors read?
08:31So, again, a disclosure, we have a positive coverage on Asian paints
08:34from a long-term point of view.
08:36So, crude oil plays a dual part.
08:39When the crude oil prices are on the boil, they act as a villain.
08:42And when they are subdued, they act as a showstopper in terms of contributing
08:49to the balance sheet and profitability.
08:52Two things that I noticed was positive as far as Asian paints numbers were concerned.
08:57Export market has given a higher contribution, Sakshi.
09:00And decorative paint segment has also contributed to a higher extent.
09:05While the demand for paint overall, as far as new order market or replacement market
09:11is extremely strong, competition, what you mentioned about Billah Opus,
09:16I think now that's history, right?
09:18It has been there for quite some time.
09:19And my sense is that fine-edge, cutting competition discounts that were given out,
09:26I think reality is sunk in.
09:27You cannot go on giving those kind of discounts if you have to survive.
09:31So, my sense is that once we have a little bit of stability in the Middle East geopolitical situation,
09:38crude oil prices will resist itself on the downside.
09:41And that might be a sign of relief for the entire paint manufacturing sector
09:45or, as a matter of fact, aviation sector or, as a matter of fact,
09:49tire manufacturing sectors, which are largely directly dependent on where the crude oil price is headed.
09:56Absolutely.
09:57Let's also continue to focus on the impact of the rising crude oil prices on many other industries as well.
10:03We'll talk about the travel industry, aviation industry at large as well.
10:07With Diwali travel rush around the corner,
10:09air phase could actually remain under pressure.
10:11Indigo is now signalling further fare increases may be necessary
10:14as soaring aviation fuel prices and rupee depreciation squeeze its finances.
10:19In fact, CEO Willie Walsh has also said the airline has been able to recover
10:23only around 60% of the increase in fuel costs through the fares and surcharges thus far.
10:28With fuel costs expected to remain elevated, what does it mean for passengers?
10:32Let me actually get in my colleague Karishma Asudhani with more details on the same.
10:36Karishma, how much of a price hike are you anticipating this festive season?
10:40Already we've seen many instances of fare hikes coming in.
10:44There's been a growing clamour to the government to keep an eye out on, you know,
10:48the caps that should be necessitated on the rising air phase, especially during the festive season.
10:53But the crude oil prices are only making it tough for aviation.
10:59Sakshi, firstly, I want to correct us explicitly that Indigo has not very confidently put out there
11:06saying that fare hikes or hike in airfares are expected.
11:10I do understand that Willie Walsh comes with the reputation of being a cost cutter,
11:17but Indigo is no airline where he needs to cost cut.
11:20It's not suffering with any kind of cost inefficiency, and its cost economics are very much sorted.
11:26But the airline has definitely been hit by external geopolitical factors and high crude oil prices,
11:33majorly the hike in aviation turbine fuel, which has led it to recover only 60 percent of its fuel costs.
11:42Walsh has definitely said that the fuel price impact can continue to happen in Q3,
11:50and that is because of the external factors.
11:53But I think the way ahead, what we see is the challenge for him and for the airline is that
12:01how are they going to ensure that they're able to manage these external factors well?
12:09And if they have to pass on the cost to the consumers, which they already had to, just like any
12:15other airline,
12:16if they have to continue to pass on, then how will they do that without the demand being impacted of
12:21the airline
12:22and majorly without compromising on its long-term ambition?
12:27Thanks, Harishma, for getting us those details.
12:30Gorang, we'll take a view from you as well.
12:33Well, apart from aviation pains that we've discussed, which are the sectors that you believe are likely to have a
12:41long-term
12:42or a prolonged impact of the surging crude oil prices, and that may also continue to hurt earnings,
12:47even going forward in Q3?
12:55Gorang, are you on mute? We couldn't hear you.
13:02Sakshi, I'm so sorry for that. I muted myself. I apologize for that.
13:06So, you and me and the entire nation would pray to Lord Almighty that we don't have to see elevated
13:14crude oil prices
13:14for a long period of time because that will have an impact on your budget and my budget and everybody's
13:20budget,
13:20point number one. Point number two, it will also have an impact on the GDP growth rate
13:24and, more importantly, have an impact on the inflation front.
13:28So, let's hope. And, Sakshi, remember one thing, that in situations like geopolitical uncertainty,
13:34speculative premiums go up drastically.
13:38And when the situation is about to get normalized or there is any positive news,
13:43then these will correct also downwards as they've gone up.
13:46And we have seen this very recently.
13:48It went up to $115, $120 and then it corrected to $70, sub-$70.
13:53So, my sense is that immediate, I mean, nobody can predict, Sakshi, honestly,
13:58nobody in this world, in the given situation, will be able to give you a clear-cut, decisive direction
14:03of crude oil prices because it is totally, totally dependent on the news flows
14:06and the escalation in the geopolitical situation.
14:09So, let's hope that we don't have to see elevated levels for a long period of time
14:13and we see some pull-off via some kind of so-called deal or a peace process.
14:21Okay. Let's also focus on some more earnings coming in.
14:25From the Pharma pack, Sun Pharma came out with the earnings.
14:28The stock also gained about 3% in trade post those numbers as well.
14:32Strong set of numbers coming in across the board for Sun Pharma.
14:36Pharma industry as it is or the sector as it is has been actually, you know,
14:41one of those winning performing spaces for the markets and for investors all through this year.
14:46It's bucked the trend as well.
14:48How would you look at Sun Pharma at 1,801 post the earnings?
14:52We've seen revenue up by about 11 odd percent, EBITDA by 4.8 percent, margins at 29.3 percent.
14:59But there is a one-time loss also of 12,69 odd crore rupees that has led to the profitability
15:05getting impacted on this exceptional loss.
15:09Exceptional loss is exceptional, right?
15:11Hopefully, it will not be repeated in that quarter to come by Sakshi.
15:15As a disclosure with all regulations in place and disclosures that we do have positive coverage on Sun Pharma.
15:22And not only on Sun Pharma, Sakshi, even over here, we have positive coverage on small cap, mid cap, large
15:27cap Pharma names.
15:28Mr. President Trump can say whatever he wants to say in terms of tariff and then he can chicken out
15:34the way he did it for the pharma sector.
15:37So, our sense is that across the pharma universe, whether it is CDMOs, whether it is APIs, whether it is
15:45generics, whether it is biosimilar,
15:49whether it is India, India, India market is a huge opportunity as there is a concern in the immediate short
15:53to medium term because of the high percentage of profits that have been added to the patient's bills when they
16:03get well and they have to, you know, check out of the or get discharged from the hospitals.
16:08And there is going to be a cap over there, in the near future, we will come to know about
16:13that.
16:13This may have an impact on the earnings of hospitals as well as some pharma companies.
16:17But having said that, huge, huge opportunity both in the local and global markets.
16:22And my sense is that pharma sector overall should perform quite well.
16:29All right. Time to take some queries from our viewers then, Gaurang.
16:33We have Sharath Pandey from Varan SC asking you about the pharma sector itself.
16:37Is the pharma sector still good enough as an investment opportunity for the long term despite the gains?
16:43So, I hope and pray we don't have to take medicines.
16:46And our health is good on a lighter note.
16:50But yes, pharma sector is still interactive.
16:51It depends what investment ideas you are identifying.
16:54Just to name a couple of them for its benefits, Sakshi, Sun Pharma, Sipla, Dr. Reddy's, Deedee's Laboratories.
17:00Amongst the frontline names, amongst the mid-cap universe, Orbindo Pharma and Natco Pharma.
17:06Amongst the small-cap names, Granules India.
17:09These are some of the investment ideas on the fund.
17:12Okay. Ajit Singh from Chandigarh asks you,
17:15what is your outlook on defense and shipbuilding stocks over the next three to six months?
17:22I thought it was three to six years, Sakshi,
17:24because I always maintain that I have a longest time horizon when it comes to defense
17:28because order books don't get executed in three to six months.
17:32Please keep that in mind.
17:33They are very complex, precise engineering, complex engineering outcomes.
17:37So, three to six months, first of all, I'm not qualified.
17:41From a long-term point of view, we remain extremely positive on the defense back.
17:44And my sense is that defense is a sector which is going to shine bright like the North Star
17:50for the next couple of years, maybe three years, five years or maybe more,
17:54given the kind of order book, opportunity in the local market and export market, global markets.
17:59Positive on Musgaum Docs, positive on BEL, positive on Astra Microwave.
18:05Okay. So, the defense sector is going to be shining like the North Star for next few years.
18:12And that's where you have to keep an eye out on as well.
18:15Nikki from Dehradun says,
18:17Gaurang sir, among cements, paints and real estate stocks,
18:21which sector offers better investment opportunities?
18:27So, again, a difficult one to answer, but we are positive on all three.
18:31Cement, paints and real estate.
18:33We just discussed Asian paints.
18:35But real estate happens to be a little bit high risk,
18:40Sakshi, because of the nature, high Vita nature.
18:43Cement is something that we have been positive also again for a very long period of time.
18:49Excuse me.
18:49If I have to share one idea from cement, one from Asian paints we already discussed,
18:55So, one idea from cement and one idea from real estate.
18:58Real estate, Kodiraj properties and from cement,
19:01if you want to pick large cap, then Ultratech, ACC or Amuja,
19:04you can pick either of them.
19:05If you want to look at mid cap,
19:07you can look at JK Lakshmi Cement, Ramco Cement and Dalmiya Bharat.
19:11Okay. Fantastic.
19:12Will you hear that?
19:13Thank you so much, Gaurang, for being with us
19:15and sharing all those insights with all our viewers.
19:17As always, a pleasure to have you.
19:19Let's quickly look at how the markets are shutting shop.
19:21Viewers, 23,053.
19:22So, we managed to end about 116 points higher in trade.
19:27Last couple of minutes did show you that gas impact also pulled it up,
19:30half a percent higher,
19:31but we cooled off from the day's high a little bit also.
19:34Nifty Bank, however, declined by 0.4%.
19:37And from the low point of the day,
19:40there was just like that slight uptick from the gas impact coming in true.
19:44But the key sector overall winner was IT with 2.3% gains.
19:49Pharma with about 1.5% gains.
19:52Also joining in into the green zone,
19:54you had infrastructure, financial services and private banks,
19:58just about that bit of gains coming in there.
20:00But where the weakness persisted, small and mid caps,
20:031.8% of a decline coming in for the small caps,
20:06mid caps down 0.9% as well.
20:09So, all those gains that we actually saw in mid and small caps
20:12over the last couple of months,
20:13you are seeing time and again profit taking after
20:16and a sell on rise, you know,
20:18impact coming in on these broader market stories as well.
20:21On the Nifty, you had Trent, Indigo, Infosys and Sun Pharma,
20:26including that HCL tech and power grid as among those gainers,
20:30anywhere between 2.5% to 5.5% of gains coming in.
20:34But let's focus on what to expect as we enter into summer 2083 very soon.
20:40After a prolonged market correction,
20:42is the worst behind us with valuations turning attractive
20:46and earnings growth improving beyond the Nifty 50?
20:48Where will the next market rally actually come in from?
20:52And as we enter the news somewhat,
20:54how should you invest and allocate your money
20:57across equity, debt and gold?
20:59Here's what Ebala Subramanian,
21:01MD and CEO of Aditya Birla Sun Life AMC,
21:03believes lies ahead of us.
21:07If you look at the earnings of companies,
21:09they're large versus mid and small.
21:12The earnings of the company is increasingly,
21:14it's becoming more and more robust
21:17and predictable and higher
21:19as we go around the market.
21:21When I say Nifty 50 versus non-Nifty 50,
21:25that's something we are now seeing
21:28repeatedly good performance coming from the segment.
21:31And second is,
21:32for the ancillary companies,
21:34whether it is the get-off energy sectors,
21:36whether it is the automotive sectors,
21:38whether it is companies related to the railway sectors
21:40or different sectors,
21:41the ancillary companies, I call it,
21:43maybe they are making the critical component
21:45which I think is being used in some of these sectors.
21:48That rate of growth has been a little higher
21:50than the large companies.
21:53Therefore, plus also if you look at it
21:55as the Indian economy continues to grow bigger and bigger,
21:58the breadth and width I think will continue to be rising.
22:00Therefore, you will find many new companies
22:02coming into the capital market
22:04to access resources,
22:06to further expand their business
22:09and create a short-down as well.
22:11Therefore, my belief is
22:13it will be a broader market.
22:14Of course, today if you look at Nifty versus
22:16the other indices,
22:19Nifty has become cheaper
22:20on a longer-term valuation basis.
22:22Also, one must accept the fact
22:23that Nifty, if I divide it into two parts,
22:26where the FI ownership is larger
22:28and the FI ownership is the least.
22:30Definitely, wherever the FI ownership is very large,
22:32we have seen a significant fall.
22:34Therefore, they have become somewhat reasonable
22:36in terms of valuations.
22:37But having said that,
22:38I think the trigger point would come
22:42when the FI growth starts coming in,
22:43which I expect this year to happen.
22:45Mostly it will come through the large cap.
22:47Mostly it will come through the Nifty 50.
22:50As the participants coming in,
22:51Nifty 50 increases,
22:52our sense of 30 increases
22:53as part of the index investing.
22:55You will also find
22:56the rest of the market are also moving
22:58because of,
22:58not because of the valuation,
23:00because of the expected earning growth
23:02and the values remain higher
23:02in that segment of the market.
23:04This year, I would say
23:06equity one should look for performance.
23:09I think if I adjusted for taxation,
23:11I would probably even assume
23:13even fixed income
23:14have become very attractive
23:15given the fact
23:16the last two months,
23:18the yields are formed
23:19are most about 8.3, 8.4 percent
23:21in the short term
23:22and 10 year yield is now
23:23about 7.5.
23:24The 30 year yield is about 8.8.
23:26But for the tax adjustment,
23:28the adjusted tax adjust return,
23:30equal tax adjust return
23:31is far better.
23:32Therefore,
23:33before then,
23:33I would have said that
23:34even big income
23:35should be part of your portfolio.
23:37But having said that,
23:38I think equity
23:39would remain
23:40in asset class
23:41both large and mid-cap
23:43and small cap.
23:43Even we are as a funders
23:45presumably bullish
23:45on mid-cap
23:46and small cap
23:46not for the one year time period,
23:47for longer time period.
23:49Therefore,
23:49each should remain old.
23:50Even gold is something
23:52given the uncertainty
23:53that the world is going through.
23:54Gold and asset class
23:55should also be being
23:56part of the portfolio.
23:57The question is
23:59the over weight
24:00have to remain
24:00on the equity
24:02followed by
24:03pigeon count
24:04of the gold.
24:04That's the way I would see it.
24:07Alright viewers,
24:08it's time to take a break
24:10and now
24:10and wrap up
24:11the Business Today show
24:12right here.
24:12In case you too
24:13have any questions
24:14about your investments
24:15in stock markets,
24:16gold or mutual funds,
24:17then you can definitely
24:18send us your questions
24:19on the number
24:20that's flashing on your screens.
24:21But we'll wrap it up
24:21on that note
24:22and we'll be back
24:23on India Today
24:24very shortly.
24:25We'll see you next time.