Media Stocks Starting To Show A Trend | Trade Setup: August 24
Trade Setup | Difficult to see a trending upmove ahead of Jackson Hole address. #BQLive
Transcript
00:00 Good morning and thanks so much for tuning into the Trade Setup. I'm Neenat Shah. Let's
00:03 get started with the key news flow. The global markets are benign. The S&P 500 actually gained
00:09 as yields slid amidst Fed pause bets. So I don't know how long these bets will last until
00:14 tomorrow because there will be some bit of, how do I say it, a bit of, not a jitter really,
00:23 but anxiousness around the Jackson Hole symposium and what Jerome Powell has to say. Stock futures
00:28 though, the US stock futures have climbed as NVIDIA beat Wall Street earnings estimates.
00:32 And that's what I'm saying. Good global markets yesterday. Looks like a positive market today
00:38 as well, at least the NASDAQ. And therefore the cues around our markets are positive.
00:42 Sugar has surged and concerns of India export curve as output has dropped across the world.
00:47 US crude inventory fell to the lowest since December 30th. Frankly, world over, the world
00:52 crude inventory, as I saw in one of the Bloomberg posts, seems to suggest that global stockpiles
01:00 are at multi-year lows. Does that mean therefore that if the OPEC takes even one move towards
01:07 reducing production in any fashion, coming closer to winter, are we looking at upsides
01:13 to crude? Well, I don't want to preempt really such a volatile commodity, just reporting
01:18 the news as they are. But the US market, like I said, did well yesterday. So the Dow, the
01:24 S&P and the NASDAQ. OK, this is the story that Virat has brought it up. The US stockpiles
01:30 have dropped to the lowest level this year. Thanks for that, Virat. It'll be on our website
01:37 as well, by the way. So this is what the US markets did. Strong show on the NASDAQ futures,
01:43 as I said, are up close to a percent driven by NVIDIA's earnings sentiment. So watch out
01:47 for US markets. Yields relative, the other cues will come up on your screen, yields relative
01:53 to what they were, a lower, look at that, 4.21 versus 4.31 yesterday, which is a high
01:58 of 4.35 or thereabouts. So certainly some bit of a downtick in yields, which is very,
02:03 very welcome, if you will. The GIFT Nifty though indicating a flattish start and not
02:08 surprising per se. But we will pick up a little bit of steam. By the way, so first, what happened
02:13 yesterday? Nifty 50 gained about 48 points to close at 1944. Bank Nifty after a really
02:19 long time, put up its hand, increased by about a percent, 1.1 percent led by Federal Bank
02:25 and followed by Axis Bank. And frankly, that was a key that despite these banks doing well
02:29 because they were weighted, the Nifty PSU Bank was still the top gainer amongst indices
02:34 followed by the Nifty Private Bank. So PSU banks continue to dominate versus private
02:39 banks. Frankly, if you look at a story that Dr. Sikanarayan put out on the weekend, not
02:44 a story, but his opening call over the weekend, this wonderful chart around how it's not just
02:50 a recent phenomenon. Since I think November 2020 is what he points out, the ratio of PSU
02:56 banks to private banks, select bundle of PSU banks to private banks, the ratio has consistently
03:03 come up, which means that PSU banks have actually outperformed private banks. A bunch of PSU
03:08 banks have outperformed private banks, not just right now, since November 2020. Quite
03:13 a stunning statistic, really. Nevertheless, so that's what happened in markets yesterday.
03:17 Now, the trade setup, I think it's difficult to see it trending up more. Okay. Vedant is
03:23 trying to get stuff and this is the chart that I was talking about. So I'll just get
03:27 to trade setup in a bit. But yeah, these are one week candlesticks. And if you see that
03:31 peak, that is November 2020 or thereabouts, since then, the CNX PSU bank, the nifty private
03:40 bank, you can see that the performance has been in favor of the CNX PSU bank. Quite a
03:45 telling statistic. Okay. Thanks Vedant for that. Let's move on to the trade setup. It's
03:50 difficult to see a trending up ahead of the Jackson Hole address in the markets. We were
03:54 well today as well. Will this trend continue in the next, into tomorrow's session as well?
04:00 I would suspect not, but I may be wrong. Remember, for the last few days, I've been
04:04 saying that quant indicators are still saying that the market is not a short and selectively
04:09 would be a long. And frankly, quite a headline in the season, just moved yesterday. We've
04:15 seen traction witnessed at the broader end of the market for the last few days, right?
04:20 I mean, the nifty mid cap, 100, let's say, the nifty mid cap 100 or the nifty mid cap
04:27 150, whichever, whichever index you take, right? And if you just see what's happened
04:31 at the, at that end of the spectrum or the BSE 500, right? Let me just try and pull up
04:36 the BSE 500 index. And if you look at it, the last five days, the BSE 500 index has
04:41 gained from 21st August, it was at 26553, it's at 26892. So while the mid cap, large
04:49 caps haven't moved too much, the broader end of the spectrum certainly has made a bit of
04:52 a move. And, and therefore we starting to see that up already. Media stocks are now
04:59 starting to show a bit of a trend the last few days. But that is zero, almost zero institutional
05:05 activity as yet, at least the ones that I've spoken to, there is no activity out there.
05:10 And therefore, I don't know if this becomes an uptrend, because usually you need the big
05:15 money to come in for an uptrend to emerge. Don't see that happening as yet. But that
05:19 may change. Sun TV, for example, yesterday was up about 5%, at 5.19 times the average
05:26 volumes. Similarly, so you know, that's the point I'm making about media stocks. So the
05:30 key price and volume movers will come up on your screen next is Sun TV, strong up move
05:35 there. Federal Bank and RBL Bank in the banking side doing a small move yesterday, which is
05:40 a good sign to see. There was HAL always there. And Crompton Greece had a bit of a move. But
05:45 yeah, the point that I'm trying to make is in the first three, media, Sun TV, some of
05:50 the others, the network 18 twins have done well. Z is in a F&O band. So I think until
05:55 that moves out, might be difficult to see a big up move because a large up move happened
06:00 on the day of the announcement. But never know there could be more in store. So media
06:03 is certainly emerging as a pocket in focus. An IPO update and I don't usually do this,
06:08 but just the quantum of subscription in Aeroflex 21 times on day two, I suspect that today,
06:15 we might well see this stock or this not a stock, this IPO, see some very high subscription
06:22 levels very close to what some of the other companies have done. Just the fact that on
06:27 day one, it was six times day two, it's 21 times, lead me to believe that there could
06:31 be some interest, interesting statistic coming in at the end of the day today. So let's wait
06:37 and watch. Like I said, the anchor book and the pre IPO allocation to two or three smart
06:44 investors has been pretty interesting. Let's see what Aeroflex does today. Last day, do
06:49 subscribe to the IPO, by the way, if you like it, please do your own due diligence. Just
06:53 subscription doesn't mean that it's a company that will necessarily do well. But yes, I can
06:59 assure you that good subscription does mean that you might get a pop, even if you don't
07:04 want to hold the stock. So therefore, from a trading perspective, investing because of how
07:07 you look at it might be an interesting one to look at. I would urge you to see the IPO
07:12 or that my colleague Sajid Mangat would have done with the Aeroflex management, and that
07:16 will give you an insight or two about what the company is about. I would urge everybody
07:21 to take a call on subscription only post understanding a little bit about the company. But the numbers
07:26 are talking and therefore it's my duty to bring to you what the numbers are saying,
07:30 as is the case with the stocks to focus on today. So, CoForge is the first one on my
07:35 list. It's a Hulse PV to sell up to 26.63% of outstanding shares. The floor price is
07:42 at 4550 per equity share and about a 7.4% discount to the current market price. So watch
07:48 out for CoForge today. Remember, I mean, rather remember that SJS had a large equity sale
07:56 just two days back and the stock ended 3% higher. I'm not saying the same will happen
07:59 with CoForge if anything. I would suspect that the sector that it is in and because
08:03 IT is not exactly in favor, CoForge may start lower and stay lower. But who knows if the
08:07 buying interest is strong and the reverse may happen as well. Reliance Industries, Qatar
08:12 Investment Authority to invest about 8,278 crore in Reliance Retail Ventures at a premium
08:18 equity value of 8.278 lakh rupees. So watch out Reliance. It's about time that the big
08:27 boy makes some bit of a move for the index. Let's see if this leads the stock to do it.
08:31 I have no idea whether it will go on or not because Reliance has been a bit of a dog of
08:34 a stock recently, but let's wait and watch. Vascon Engineers has received orders worth
08:40 605 crores from Bihar Medical Services and Infrastructure Corporation for construction
08:45 of a couple of buildings. For Vascon, this seems to be a sizable order. The stock was
08:51 up about 11% day before yesterday. Let's see if there's some more out there. NHPC, there's
08:56 no amount attached to this, but it's in accord with Andhra Pradesh Power Generation Corporation
09:00 for AP Hydro as well as renewable projects. Maybe NHPC has a bit of a move. Remember,
09:04 it's won some orders recently as have some of the others as well like SGBN, etc. So it
09:09 could be interesting. P&G Health, revenues up 1.78%, EBITDA down though, Q4 that is,
09:15 margins down, net profit down, is declared a dividend. The FY23 numbers look okay, but
09:23 these numbers don't look all that great. Maybe the stock reacts negatively, who knows. But
09:28 there's a large dividend that they've announced as well, which could help. Larger than 50 rupees,
09:32 but that size is not very large, but yeah, whatever. And then some brokerage notes. So
09:39 you know, there is a, there is also this note from Incred Capital on BCL Industries, if I'm
09:47 not wrong, because yesterday or day before, there was this announcement about uptick in
09:53 the price of ethanol, which is green based, if I'm not wrong. And that could have been
09:58 constructive for BCL, I think, which is why Incred has this uptick, price target uptick
10:04 given on BCL. So do watch out for this one. I'll tell you the note as well. I think it
10:10 says, yes, they increased the target price to 9.25 rupees per share from 7.90. They say
10:15 BCL Industries should gain on the top line front with capacity addition, firing on all
10:20 cylinders and the benefits of innovation on the power cost front to fully accrue in the
10:24 coming quarters. So yeah, watch out for this one. Watch out for Paytm. Bernstein has an
10:30 outperformed rating with the target price of 1100, which is 31% upside. They say they
10:35 find Paytm a dominant digital payments platform with a promising head start in the lending
10:39 business. They find the company to be on the right side of the disruption. They expect
10:44 its loan disbursal volumes to grow sharply and achieve a market share of 4%, which is
10:51 in a high yield, which is the above 13% interest rate household lending segment, which is actually
10:56 a telling statistic. And this is the important line, they expect the business to break even
11:00 by 525 and generate an EPS of 130 rupees by 530. That could be interesting for a business
11:10 like Paytm. And I don't know if this brings about an immediate move on the stock or not,
11:17 but it's a very interesting note, very constructive note, and therefore could be one to watch
11:24 out for today. You know, in the same note on SBI cards, they've been initiating an underperform
11:33 on SBI cards, Bernstein with a target price of 650 rupees per share. So
11:40 may not be great news for them. So SBI cards, let's wait and watch how that one reacts if it
11:47 does. Nevertheless, that's the long and short of the trade setup today. MK Global Financial had
11:55 the three-day investor conference last week. And on back of that, getting Nirav Sheth to try and
12:02 get a sense of what were the key takeaways from that investor conference. So talking point at
12:08 10 a.m. is focusing on that and the normal trade talk conversations continue during the course of
12:13 the day. Thanks so much for joining in on the trade setup today.
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