Trade Talk | Markets See Choppy Trade, What Next?
Transcript
00:00 Good morning and thanks so much for tuning in. You're watching BQ Prime. This is Trade
00:04 Talk. My name is Alex Mathew. With me is Hiral Dadia. Morning, Hiral.
00:07 Good morning, Alex.
00:08 Well, we saw a lot of chop and churn in trade yesterday, the Nifty 50 flitting between gains
00:14 and losses and particularly the Bank Nifty from the low point of the day. At one point,
00:19 it had gained about 500 points. Of course, it ended off that high point as well. So,
00:24 a lot of chop and churn. Could that pan out today as well?
00:27 Absolutely. So, what's happening in the markets is clearly, you know, when we were talking
00:32 of levels of 20, 20, 400 as well, buy on, you know, buy on dips and sell on rally. That
00:39 was the clear trend that we were watching out for. And from here on as well, with the
00:43 kind of selling that has again started to come in, it's happening specifically in the
00:49 broader markets, but in large caps as well. It's interesting to see how the Bank Nifty
00:53 is panning out. And as you mentioned, a good up move in yesterday's session, Bajaj Finance
00:59 as well as HDFC Bank, these were two of the names which actually contributed as well.
01:04 Now, it's interesting to see what's happening with the Reliance Industries as well, right?
01:09 The way RIL has been panning out, the key question that we're asking now is, is RIL
01:14 is oversold or what? You know, whether it's, I mean, what's happening from here on and
01:19 what should be done? Because from a fundamental perspective, we've analyzed it absolutely
01:24 enough in terms of, you know, what's the value unlocking that could be expected. But from
01:28 a technical perspective now, what are charts indicating is going to be interesting to watch
01:32 out for, Alex?
01:33 No, absolutely. And a couple of packs that were moving on the back of news, one we were
01:38 speaking about in the newsroom as well, the Realty Pack was moving very substantially
01:42 yesterday. And as a whole, I think at one point it was up, the index was up about 1.7%,
01:49 ended up about 1.4% in an otherwise dreary session for the rest of the market. And this
01:55 is on the back of a possible subsidy, at least that's the buzz, that would boost housing
02:01 sales.
02:02 Absolutely. The interest, you know, subsidy that we're talking about as well could be
02:07 positive. So, let's see how, you know, once we get confirmations on that, how it pans
02:11 out.
02:12 And sugar, exactly. I was just coming to that. Sugar is interesting, because the kind of
02:15 up move that we've seen in terms of the sugar pack over the last couple of trading sessions,
02:20 clearly the way the rainfall is going to impact the yield from a production perspective, that's
02:27 one of the reasons we're seeing the prices increase as well. And that's not only in the
02:32 domestic markets, but globally also sugar prices have been increasing pretty substantially.
02:36 I think they're almost at a 12-year high right now. With all of that said and done, the next
02:41 step is going to be in terms of the exports, because this is the first year in seven years
02:45 where India is looking to ban exports in terms of sugar. They've not come out with any of
02:49 the export quotas so far, so don't see that happening. And there could be a couple of
02:54 other measures that the government could take as well, because usually we've seen this trend
02:58 where during the festive season as well, the sugar prices start to increase. So, let's
03:03 see what the government comes in and does, because clearly the sugar companies are having
03:08 a joy ride. Absolutely. All right. So, there's a lot of individual stocks that we will focus
03:12 on on the back of news. But before we get to that, Hiral, let's take a check on what
03:17 the technical indicators are, or rather what the cues from the F&O space are. Agam is joining
03:22 in to tell you more about that. Agam, good morning.
03:25 Good morning. Right, Alex. So, the 20,000 mark on the Nifty seems very far at the moment.
03:30 I know we're not too far in terms of percentage-wise, but the way we've seen a buildup, a substantial
03:36 buildup in open interest and in terms of the monthly numbers is that for now, we're actually
03:42 starting to see the resistance build around the 19,800 mark. That said, in terms of futures,
03:48 across series, remember that we will have an expiry for the Nifty as well as the Bank
03:52 Nifty, the monthly expiry this coming Thursday, the 28th. So, across futures, we've seen about
03:57 3.3% added in OI. And as far as the bank Nifty – pardon me, the rollovers are concerned,
04:02 that stands around 35%. Moving on to the Bank Nifty, an addition of around 6.7% in open
04:07 interest and the Bank Nifty futures rollovers also standing at 42%. Rollovers are picking
04:12 up, but it is essentially today and tomorrow where we will get to know whether or not this
04:17 is on the long side or the short side, because a lot of that will also depend on the way
04:22 markets move. What levels are you watching out for as far as this expiry is concerned?
04:27 Well, it's a 300-point range, but as I was suggesting, 19,800 on the higher end where
04:32 we've seen substantial OI buildup. And on the lower end, we're starting to see more
04:36 and more buildup around the 19,500 mark. There's been a lot of writing yesterday as well, and
04:42 naturally around the put, because of the fact that we saw the Nifty move higher in yesterday's
04:48 trade after hitting that intraday low. Finally, coming down to the Bank Nifty, what levels
04:55 are we watching out for here? Well, on the upper end, it's still the 46,000 mark, but
05:00 on the lower end, keeping an eye on the 45,500 level as well. That's where we're seeing a
05:05 lot of OI buildup. So, these are the levels that we are playing around with, but for now,
05:10 as I've suggested, 19,800 will be a tough takeout for a lot of these traders, at least
05:17 over the next few days. But speaking of the expiry, the monthly expiry also coincides
05:22 with Ganesh Vishadjan, as we know that Ganesh is the breaker of barriers. And so, maybe
05:28 that 19,800 is something that can in fact be taken up. Absolutely. But you know, what's
05:33 interesting is the way there was conviction in the markets to see markets sustain above
05:39 those 20,000 levels in the month of September, and probably inch higher towards 2300 and
05:46 2400. That absolutely seems to be impossible, you know, taking the numbers into consideration,
05:51 right? Yeah, absolutely. It is going to be very hard, and we're going to have to wait
05:56 and watch. Like I said, that 20,000 at the moment is not even in consideration. It's
06:01 the 19,900, 19,800, where we'll have to see how things develop over the next few days
06:07 and weeks. And probably this consolidation might be good as well, you know. Thanks, Agam,
06:12 for getting us the details. So, that's with regards to what markets are looking like.
06:16 But a lot of individual names and stocks that will be in focus in today's session, one of
06:21 it is L&T, and that's on the back of the buyback that has closed yesterday. So, data crunching
06:26 in terms of that is what Varsha has done, as well as a lot of pharma names that continue
06:31 to remain in focus. Varsha, standing by to get us more. Varsha, what do you have for
06:34 us? Yeah, so starting off with L&T. So, L&T's first ever buyback has been subscribed 7.2
06:40 times. Now, against 3.13 crore shares that offer, the company has received 22.55 crore
06:47 shares for Rs. 72,160 crore. Now, the company had fixed the buyback size at just over Rs.
06:54 10,000 crore. The original buyback price was Rs. 3,000, which was subsequently raised to
06:58 Rs. 3,200 a few days before the buyback program opened. And the buyback was opened between
07:03 September 18 and ended on 25th. Now, the bulk of the demand was from qualified institutional
07:08 buyers accounting for over 86% of the subscriptions. Under this, foreign institutional investors
07:15 dominated the demand followed by mutual funds, and the non-institutional investors accounted
07:20 for less than 1% of the bids, while individual investors were at 12.4%. So, yeah, so this
07:26 was the update for L&T. Now, moving on to the pharma companies that one needs to watch
07:30 out for today. So, first, we have Stride Pharma, which the board approved the spinning off
07:36 Oral Soft Gelatin Contract manufacturing business into Stellis Biopharma. Now, the new entity
07:42 will be called as OneSource. Now, shareholders will get one share of OneSource with a face
07:48 value of Rs. 1 apiece for every two shares held in Stride Pharma. Now, there's no cash
07:54 consideration which has been involved and the implied value of proposed shares issued
07:58 by OneSource to Stride shareholders will be Rs. 364 per share. Now, post demerger, the
08:04 promoter is expected to hold 39% in Stellis Biopharma, while 61% will be owned by the
08:09 public. Now, on transfer of three businesses, OneSource will have an equity value of Rs.
08:16 7,550 crores and Stride shareholders will eventually own 44% of the economics of OneSource.
08:22 Then the next we have Fortes Healthcare, where company will acquire 99.9% stake in Artistry
08:27 Proprietary, private limited for Rs. 32 crores. Now, this Artistry Proprietary holds a license
08:34 for KMDA for use and occupancy of land for a period of 99 years. Now, this land is strategically
08:40 situated adjacent to Fortes Hospital, making it a valuable asset for Fortes Healthcare.
08:47 And an expected time period within which this has to be completed is 60 days from the date
08:52 of execution of the documents. Lastly, we have InSwift Labs, which approved amalgamation
08:58 of InSip Ltd with itself. Now, company will give 100 shares for every 655 held in InSwift
09:04 after merger. Turnover of InSwift as on 31st March 2023 is Rs. 410 crores, while they have
09:11 a negative net worth of Rs. 716 crores. Alright, thanks so much, Varsha, for giving
09:16 us those details. Certainly, all important stocks to watch out for in trade, particularly
09:20 strides, right? I forgot to mention, in fact, our colleague Sajid spoke with the NSE yesterday
09:28 about the possibility of extended trading. What do you think about that? I mean, that's
09:33 going to be interesting because in fact, we did run a poll as well. And clearly, I think
09:37 the last number that I saw was around 60% to 65%, at least, more of the opinion that
09:44 we do not want extending trading hours. However, serious traders probably will want that because
09:49 that absolutely helps them bridge the gap between our markets as well as the US markets
09:54 as well. So, that rollover that happens is going to be interesting though. They do get
09:58 a break from 3.30 to 6pm because the timings that they are talking about is 6 to 9 somewhere.
10:02 I think that's the primary purpose as well, right? To help price in some of those key
10:07 developments after normal trading hours. But let's see how that pans out. For now, let's
10:12 turn attention to more stocks that you need to watch out for. And Rishi is joining in
10:16 to give you more of that information. Rishi, what are you picking up?
10:20 So, firstly, there's Tata Steel, which got an upgrade from Moody's to an investment grade.
10:25 So, its outlook was also improved from the current stable to a positive outlook. And
10:30 this is because Moody expects an improvement in profits as well as the debt reduction efforts
10:34 that Tata Steel will undertake. This may be possibly because after the recent UK update
10:40 that we got, that Tata Steel is signing a deal with the UK government for about $1.2
10:46 billion and it was for an electric arc furnace, which is also going to lead to a lot of cost
10:50 savings. This may have possibly also led Moody's to give an upgrade. Now, it also feels that
10:54 the liquidity, current liquidity is sufficient to meet any of the spending needs that Tata
10:58 Steel has. Following this, we have Salazar Techno Engineering, which has commissioned
11:06 a zinc galvanization plant in the UP. This was something that was long awaited and it
11:10 is a 96,000 ton plant. The company is saying that it will enable it to make higher margin
11:16 monopoles after this galvanization plant is commissioned. The stock may possibly react
11:22 today as well. After that, we have Century Textiles. Its unit, which is Birla Estates,
11:28 has launched a phase 1 of Birla Trimaya in Bengaluru. It is a residential project and
11:33 the company expects a revenue potential of about Rs.3,000 crores from this project. Following
11:37 this, we also have Shila Foam, which is planning to raise up to Rs.1,200 crores via QIP. It
11:42 will allocate about over 1 crore shares at a price of Rs.1,078, which is at a discount
11:51 of 4.4% to yesterday's closing price. Then there is Ujjivan Small Finance Bank, which
11:57 has partnered with SMC Global Securities to offer 3-in-1 accounts, which includes savings,
12:02 DMAT, as well as trading accounts. So this is something that is new. So within this agreement,
12:07 SMC Global will handle the relationship between trading and DMAT accounts. Then there's DB
12:12 Realty, which is set to acquire shares of Bamboo Hotel, Global Centre, Goan Hotels and
12:18 Realty and BD&P Hotels. This acquisition is for Rs.2,300 crores and the company plans
12:23 to enter into the hospitality business. So this is quite interesting because the hospitality
12:29 business has been picking up post-COVID and there's a lot of festive and World Cup demand
12:33 that is also coming in. So it may probably be a good time for DB Realty to come in.
12:38 So interesting names and I think clearly Tata Steel as well as Sadasa, the two metal names
12:45 actually stand out for me as well to watch out for in today's session. But moving on,
12:50 thank you Rishi for getting us the details, but a lot of other names that Sardoni is going
12:55 to talk to us about as well. Specifically, two names from her list that actually stand
13:01 out for me over here is the Waltam Transformers as well as secondly, Vishnu Pongalya wherein
13:07 this will be the first earnings that they have announced post-listing as well. Saloni,
13:13 good morning. How do the numbers stack up and what are the other names that you are
13:18 tracking? Good morning. So as you said, Waltam Transformers. So according to media reports,
13:22 the promoters of the company are planning to sell up to 12 lakh shares which represents
13:26 over 12% stake of the company via a block deal today. So the floor price is at Rs.4,600
13:33 per share which is at a 7% discount to the CMP and hence the total deal value is likely
13:38 to be around Rs.550 crores. Then we have Vishnu Prakash R Pongalya which posted its Q1 results.
13:45 So the company did exceptionally well in their top line as well as their bottom line. The
13:49 revenue rose over 49% while the net profit rose over 52%. There was also a 49% rise in
13:55 the expenses of the company due to a sharp rise in the cost of materials consumed as
14:00 well as the construction expenses. However, that did not affect the performance of the
14:04 company as seen by their performance. Next, we have GR Infra Projects. So the bids for
14:10 two projects was Rs.3,600 crores that were won by the company in February for the development,
14:16 operation and maintenance of a ropeway in the state of Uttarakhand have been annulled.
14:21 Next we have got Wipro which sold around 14-acre land parcel and building in Chennai to Casagrand
14:28 BIS Park for a concentration of Rs.266 crores. Next we have Wellspun Corp. So the company's
14:35 subsidiary which is Syntex has entered into a memorandum of understanding with the state
14:39 of Telangana to set up a manufacturing unit in the state with a total investment of Rs.350
14:45 crores. So this investment is spread over the next three years and as the project design
14:49 is at an early stage currently, the investment will not exceed Rs.50 crores in the current
14:55 fiscal. Next we have got IHCL. So the company has infused $11.5 million as equity in its
15:02 Dutch subsidiary which is EHOCO. So this investment will be used by the subsidiary to make an
15:08 investment in its step-down subsidiary which is United Overseas Holding which is in the
15:13 USA to repay its debt and for other operational purposes as well. And lastly we have got Delta
15:19 Corp. which the stock of the company hit 20% lower circuit in trade yesterday and it closed
15:24 at about 17% lower on receiving tax notice of almost Rs.17,000 crores which is three
15:29 times its current market cap. And Ashish Kacholia sold 15 lakh shares which represents 0.56%
15:36 stake in the company for Rs.144.65 apiece. Interesting update. And we will have to see
15:43 what kind of impact Delta Corp sees today as well. Thanks Aroni. In fact with this if
15:48 you see Dream 11 as well. They have also got a tax notice as well in the form of GST notice.
15:54 And larger. Exactly. So I think this will be contested as well because it is interesting
16:00 to see Rs.1200-1300 odd crores is the revenue of Delta Corp. Right. For FY23. Exactly. And
16:05 the GST demand is almost 16,000 crores. So that kind of a number, how does it stack up
16:13 is going to be interesting and let us see what comes out of it as well because on the
16:18 back of this you did have a Nazara Technologies also which was seeing a rub off effect in
16:22 yesterday's session. Yeah and which is interesting because I think that is primarily sentiment
16:28 driven because Nazara has gone on record several times to talk about the fact that their real
16:32 money gaming business is less than 5% of the overall turnover. So again we will have to
16:38 see where the dust settles. For now let us turn attention, Saloni thanks so much. Let
16:42 us turn attention to the auto space where we have got a couple of updates from Rook
16:47 Ridges on Ayesha Motors as well as Maruti Suzuki. Ayesha you will remember has been
16:53 in the news on account of Royal Enfield and the kind of challenge that is being posed
16:57 by the incumbent two-wheeler makers, the large ones at that in the form of Bajaj Auto as
17:02 well as Hero Motocorp. Himansh is joining in to give us the latest details there. Himansh,
17:07 good morning. Good morning Alex. So Rook Ridges have come out with their fresh views on the
17:11 auto space with the two majors. Well, the commentary around the auto space has been
17:16 around premiumization, new rollouts and stiffening competition. Ayesha so far this year has seen
17:22 the stock has seen been lagging the Nifty Auto index by 24% due to stiff competition
17:28 due to relative valuation contractions. The fresh competition in from Hero Harley and
17:33 Bajaj Triumph has had an impact and weighed down on the stock. The channel checks suggest
17:41 that limited impact on the interest for Royal Enfield. It still stands robust and Jefferies
17:47 expects the total volumes for this fiscal to be around 76,000. Ayesha has also gained
17:52 market share in the medium to heavy commercial vehicle segment, suggesting underlying performance
17:57 which is good in their overall across their portfolios of products. Jefferies has raised
18:03 the target price from 4000 to 4150 on the back of recovery in the two-wheeler segment
18:08 industry premiumization and potential growth in exports. While pickup and recovery in the
18:15 auto speaking of pickup and recovery in the auto space, Maruti Suzuki has been very aggressive
18:19 about their expansion plans and they expect capacity to double by FY23. Now, if one calculates,
18:26 it suggests a compound at the annual growth rate of almost 10%. Now, this would imply
18:30 heightened capex of almost to the tune of 12,000 crores per year. But HSBC anticipates
18:35 this being stretched out to the next 10 to 12 years. Market share gains are contingent
18:39 on achieving 30 to 35% in the utility vehicle segment. And as diesel cars are phased out,
18:45 Toyota and Maruti, which have a competitive edge compared to their peers, are expected
18:52 to benefit in the median term in the form of market share gains. So overall, the price
18:57 target has been revised by HSBC for research for the company upwards from 11,000 to 12,000,
19:04 implying a 13% upside as of yesterday's close.
19:08 I believe that the capacity expansion and the doubling of capacity will take place in
19:13 seven years. Yes, seven years.
19:15 Slip of the tongue where you said FY23. But let's talk about the other updates from the
19:20 primary market you have been tracking. What can you tell us about that?
19:23 Yes, absolutely. So there have been three mainline IPOs that have been live so as of
19:27 now. So we have Manoj Vaibhav, Gems and Jewelry, where the offer is expected to close tomorrow.
19:34 And so far, as of day two yesterday, the offer has been subscribed by 58% or 0.58 times.
19:41 Now the maximum amount of subscription you see here is from the retail investors, which
19:46 have subscribed 0.73 times. Then we had two IPOs and offers that were launched yesterday.
19:53 JSW Infrastructure, where the offer closes on September 27, and in the price band of
19:58 113 to 119, with a lot size of 126 shares, the company has raised Rs. 1,260 crores from
20:07 anchor investors prior to the IPO and the total issue sizes of Rs. 2,800 crores. The
20:12 IPO was subscribed 0.43 times as of day one, and retail investors have already subscribed
20:18 over one time, which is 1.38 times. Just to give our viewers some color, JSW Infrastructure
20:24 is a port-related infrastructure company. It is also the second largest port operator
20:28 in India by cargo handling volumes. Now coming on to Updater Services, which launched its
20:33 IPO along with JSW Infrastructure, and the offer is again going to be closing tomorrow
20:38 on September 27. The price band for this offer is between 280 to 300, and the lot size is
20:44 50 shares. The IPO has been subscribed 0.06 times so far. And Updater Services is a business
20:51 management platform, and it competes with the likes of Quest, SCOC, SIS Ltd, Teamlease
20:57 Services, amongst its listed industry peers. Lastly, we have Nuvava Wealth Management,
21:02 which was formerly known as Edelweiss Securities, and this company will be listed on the bourses
21:06 today. In 2020, investment from PAG had invested in the firm, and about 9% are still held with
21:15 a couple of promoters from Edelweiss Securities. So, there's lots of action in the primary
21:18 market as well. Thanks, Imanj, for getting us the details. So, both Aishwarya and Maruti
21:23 will be in focus. Aishwarya, sorry, Maruti is interesting because now we're talking of
21:27 a 12,000. Earlier, 10,000 was a key milestone, which was interesting to watch for. And now
21:32 there are targets that are coming in already for 12,000. So, let's see how that stacks
21:37 up and the action that we see in the primary markets. But clearly, if you see, gift nifty
21:41 as well right now. Today's session, it does indicate a muted start. Whether we're able
21:46 to pick up in the second half of the trading session or not is going to be interesting,
21:50 but from the data that Agam has been giving us as well, does not seem to be like a very
21:54 strong session. It seems to be slightly somber, as well as that consolidation is expected
22:00 to continue. That's all that we have on this session. Thanks for watching. And lots more
22:04 lined up on the other side. Please stay tuned to BK Briar.
22:14 Thanks.
22:15 Bye.
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