- Reviewing #BEML Q3 numbers
- Should you expect consolidation in the markets in the coming week?
Take stock of the derivative markets with Agam Vakil and Samina Nalwala on the F&O Show. #NDTVProfitLive
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- Should you expect consolidation in the markets in the coming week?
Take stock of the derivative markets with Agam Vakil and Samina Nalwala on the F&O Show. #NDTVProfitLive
______________________________________________________
For more videos subscribe to our channel: https://www.youtube.com/@NDTVProfitIndia
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TVTranscript
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00:50 Hello and welcome, this is Samina Nalwala and with me is Agam and
01:04 you're watching the FNU Show where we take you through all the stock market action.
01:09 But first up, let's do a quick check of the markets are trading as we see it.
01:14 It's a quiet Friday, Friday blues if you may want to call it.
01:17 The Nifty not doing very much in trade,
01:19 threatening the 21,700 level in terms of trade.
01:22 Well down about 15 odd points is what we have.
01:25 In terms of the breadth, the breadth is also slightly weaker with a clear bias.
01:29 She knows it's more or less a 50/50 picture.
01:32 Your top lose on trade today is ONGC down 4%.
01:35 BPCL also seeing some profits off the table after a very sharp rally that the stock
01:40 has seen.
01:40 Hindalco, Coal India, Tata Steel are some of your other losers.
01:44 On the winning side, iBank interestingly is looking good.
01:47 You've also got ITC recovering after that big fall yesterday on concerns that
01:51 that may be looking to power its stake.
01:52 The stock seeing some low level buying up about a percent.
01:55 It's not just ITC actually,
01:57 the whole FMCG pack that was trading weak is having a pleasant day of trade this
02:01 morning.
02:01 Seeing some buying emerging for Britannia and Nestle, Tata Consumers and
02:05 the likes.
02:06 HUL also not doing too badly, trading flat with a slight positive bias.
02:10 But the focus is all about earnings.
02:12 You've got a whole bunch of stocks that are reacting to those.
02:15 JK Lakshmi is up 5%.
02:16 Electra Green Tech, while it not be an earning story,
02:19 is your top gainer on the Nifty 500, up 7%.
02:22 Yes Bank continues to gain on the fourth straight day of gains coming in
02:26 with a 3% up move.
02:28 On the sell side, you've got PFC, Rail Vekas Nigam declining.
02:33 BTM also looking weaker, Tata Tele REC,
02:36 as some of the other counters that are on the sell side.
02:38 BEML as well is seeing some pressure in trade today, down about 8%.
02:42 But we've got the management to explain to us about how the quarter has been and
02:47 whether there is more to it and that catches the eye.
02:49 Shantanu Roy, CMD of BEML joins in.
02:52 Hi Shantanu, good morning.
02:54 Thank you very much for joining us.
02:56 Shantanu, on the face of it, the numbers seem to be below what the street was expecting
03:01 or even below your last year comparison in that sense.
03:06 Can you break those numbers down for us?
03:07 Tell us if there were any pressure points and
03:09 if there's more to it than what we just see on the face of it.
03:12 Hi, good morning and thank you for having me with you.
03:20 Yes, the top line has been flat,
03:25 both in terms of quarter to quarter as well as if you look at the nine-month period,
03:30 the last year and this year as well, it has grown by only 1%.
03:36 Now coming to the bottom line, there are two aspects.
03:42 One is the quarter to quarter, the other is the nine-month period to nine-month period.
03:46 So if you look at the nine-month period to nine-month period,
03:50 the consolidated PBT till December 2022 was only 56 lakhs,
03:58 whereas the consolidated PBT till December 23 is 35 crores,
04:04 which is a 61 times growth.
04:09 However, if you look at the quarter to quarter comparison,
04:14 the PBT more or less remains the same.
04:17 It was 67 crores for the last quarter ended December 22
04:23 and it is 67 crores for the quarter ended December 23.
04:27 The difference is in the profit after tax.
04:31 And that is purely because of the tax provisions or the tax liabilities
04:37 that have been accounted for in the current quarter,
04:41 in the last quarter, December 23, because of the increase in the PBT,
04:46 which was not the case the last time round.
04:49 So that is the only reason for the PAT to have gone down as compared to the last year.
04:57 Now, as far as the sales revenue is concerned, the sales revenue,
05:03 if you look at the vertical wise sales revenue,
05:06 the most encouraging aspect has been that the defense vertical has grown by 55%
05:14 as compared to the last quarter.
05:17 So has the real metro vertical.
05:20 It has grown by 55% since the last quarter.
05:23 However, the mining and construction vertical,
05:28 it has not done too well as compared to the last quarter,
05:34 only because of certain supply chain challenges.
05:37 And those supply chain challenges have been because of certain natural calamities
05:43 for certain items which were to be imported,
05:45 as well as some geopolitical conflicts, some geopolitical risks that have suddenly cropped up.
05:52 However, in the last quarter, in the coming two months,
05:56 we can expect that these challenges will be overcome.
06:00 Only thing is that the supply chain, instead of say 30 days,
06:06 now it is taking 60 days to reach us.
06:08 And so in this month, we will get almost all the material
06:13 which is required to complete this year's numbers.
06:16 And we'll be able to do that.
06:18 If we take a look at the overall sales revenue,
06:23 generally it has been 10%.
06:26 The trend has been that we do 10% of the complete revenue in the first quarter,
06:31 20% in the second quarter, 30% in the third quarter, and 40% in the fourth quarter.
06:36 So this year, I'm expecting that we will do around 45%
06:41 of the total sales revenue for this year in the third quarter,
06:44 and we are well on way to achieve that.
06:48 Just a quick question before Agam as well joins in with his questions.
06:52 Raw material costs have surged quite sharply.
06:55 I believe they're up 20%, which has driven your total expenses up by about 4%.
07:01 In terms of an outlook, given that global steel prices remain elevated,
07:07 what is the trajectory that you're picking up on?
07:10 Do you feel like there could be higher raw material prices
07:12 that you will have to grapple with for the next few quarters at least?
07:16 Let me explain to you why our other expenses have gone up.
07:22 Raw material expenses are accounted for separately.
07:25 If you look at the raw material expenses year on year,
07:27 it has gone down by 4.64% as compared to last year's material cost.
07:34 The reason for the other expenses to go up has been because
07:40 we have taken some development projects and we have to invest,
07:43 we have to spend on certain consultancy contract
07:47 and on developing some industry partners to ramp up our indigenisation efforts.
07:55 So, that has been the major reason for the other expenses to go up.
07:59 As far as the raw material costs in the coming period is concerned
08:04 or in the coming future is concerned, you see it depends on a lot of things.
08:09 It will depend on the geopolitical situation,
08:13 it will depend on the logistics cost, it will depend on the fuel prices.
08:18 So, all that put together will determine whether the raw material cost
08:22 further goes up or it further goes down.
08:25 Now, as a manufacturer, what we can do is,
08:29 and what we are doing presently also is optimising the design,
08:34 optimising the material and also going for rationalising
08:39 as well as going for bulk ordering and rate contracts
08:43 to mitigate any risk coming out of the increase in the raw material costs.
08:48 Okay. Alright, Shantanu, a quick word on your order flow for the quarter.
08:53 Where does your current order book stand
08:55 and what kind of execution of that order book can we expect going into FY25?
09:04 Well, as on 31st January 2024,
09:08 we ended with an order book of around 12,379 crores.
09:14 This financial year, we have booked around 6,600 crores of orders.
09:19 The present order book makes around 48% from rail and metro,
09:23 around 17% from mining and construction and around 35% in defence.
09:30 Now, for the current year, fortunately, we have all the orders with us.
09:37 So, order booking for the current year will not be a real challenge.
09:42 I mean, execution will, because of lack of order, should not be a challenge.
09:46 We are focusing fully on the execution for the balanced part of the current year.
09:51 As far as the next year is concerned, yes, a part of the total order book
09:57 that we will be carrying forward to the next financial year,
10:01 that will be in a position to execute.
10:03 For example, the orders for defence, the orders for mining and construction,
10:07 we expect to begin the next year with at least 1,100 to 1,200 crores of orders
10:13 for the mining and construction vertical itself.
10:15 And that entire thing will be executed next year.
10:18 As far as the other verticals are concerned,
10:22 everything cannot be executed next year.
10:24 Partly, something will go two years beyond that,
10:28 to maybe next two years, next three years.
10:31 For example, the metro order for Bangalore metro,
10:34 the execution will definitely start in the next financial year,
10:38 but the bulk execution will happen in the financial year 2025-26.
10:42 Just to give you an example.
10:43 Okay.
10:47 Well, we'll leave it at that, Chandanu.
10:49 Thanks so much for joining us and taking us through the quarters numbers,
10:52 as well as what we can expect going forward.
10:54 We wish you the best for the future.
10:56 Well, that's the management of BEML,
10:58 highlighting to us about the various challenges faced by the company,
11:02 and also what we can expect as far as your order book's concerned.
11:06 But on that note, it's time to slip into a short break.
11:09 But on the other side, we get you all the action in the futures and options space.
11:13 Stay tuned.
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14:49 Welcome back.
14:50 A quick check on the futures and options cues at the moment.
14:53 And while we do see subdued cues as far as the benchmarks are concerned,
14:56 let's take a look at how the futures are panning out.
14:59 So we do have a very little change, in fact, in open interest as far as
15:02 the Nifty futures go, about a 1.4% increase in OI, but that's not substantial.
15:07 And as far as the Bank Nifty is concerned, again, which is under,
15:11 in fact, it's not, it's outperforming the benchmarks.
15:13 And that's where we're seeing a little bit of an unwinding,
15:16 perhaps a short covering coming through,
15:19 especially given the fact that we saw such a sharp cut yesterday.
15:23 And we also saw an increase in OI.
15:25 I reckon that some traders are perhaps taking their positions off the table
15:29 as we move into the weekend.
15:31 Now, that's as far as your option market's concerned.
15:33 Where does the overall distribution stand?
15:35 Let's take a look at that as well and see.
15:38 Okay, so that's not changed too much.
15:40 We do have the most amount of increase in open interest around the 22,000 call,
15:45 but say for that, we don't have too much traction otherwise.
15:49 Let's get in expert opinion, in fact, experts for now.
15:53 We have Soni Patnaik, AVP at JM Financial Services,
15:57 as well as Amardev Singh, who is Head of Advisory at AngelOne,
16:00 who is joining us on the show.
16:01 Good morning to both of you.
16:02 Now, Soni, let's start with you, your assessment on the benchmarks.
16:07 Good morning, Agam. Thank you so much for having me on the show.
16:10 If we look at Nifty individually,
16:12 I think 21.600 holds a very crucial support going forward.
16:16 If that is broken today on a weekly basis,
16:18 then we may look at some more downside, maybe towards 21.400, 21.300 also.
16:23 On the upside, 21.800, 50, 21.900 seems to be building
16:28 a very strong resistance.
16:30 I believe that that could be quite difficult for Nifty to take out those
16:33 resistances today.
16:35 And considering that yesterday was a lot of long and winding positions
16:38 taking place in Nifty,
16:40 not a lot of fresh positions that have been formed on the longer side.
16:44 Speaking about Bank Nifty, Bank Nifty, we can see some relief today.
16:48 However, we must also remember that yesterday we'd seen a lot of fresh
16:51 shorts happening in Bank Nifty.
16:53 So that's not exactly a very positive sign.
16:56 There is multiple resistances for Bank Nifty, 45, 500, 45, 800 becomes a
17:01 resistance. It becomes more like a sell on rise market as of now.
17:05 So it's better to just stay cautious on the indices point of view and hedge
17:09 the positions going forward.
17:11 - Manohar, what about you? What is your call on Nifty and Bank Nifty today?
17:16 - I would say that Nifty, definitely we are seeing some sort of selling
17:20 pressure and on the charts, clearly there is consolidation, which is happening.
17:24 And also if you look at the put call ratio,
17:27 that also clearly shows that a lot of call writing has been happening.
17:31 So that tells me that Nifty is more or less consolidating.
17:34 So on the downside, 21,500, 550, that's an immediate zone of support.
17:39 Whereas on the upside, 21,750, 800, that's a zone of resistance.
17:44 So this is the range that Nifty is likely to trade into.
17:47 And also if you look at the heavyweights, like for example, HDFC Bank or ICICI
17:52 Bank, which have a significant weightage in Nifty, they are also on a downtrend,
17:56 but they are very close to crucial support zones.
17:58 So what could happen is that we could witness a pullback, but that pullback,
18:02 whether it's sustained, we'll have to watch out for because Nifty on the daily
18:07 charts clearly shows that it is in for consolidation.
18:10 Talking about Bank Nifty, Bank Nifty is, I would say, a weaker place as compared
18:15 to Nifty, but Bank Nifty is approaching a very crucial support zone.
18:19 So if you look at the current levels are crucial support zones,
18:23 anywhere between 45,000, that's a zone of support.
18:26 So we could have witnessed some pullback, but again, towards 46,000 levels.
18:30 So it's more or less consolidation and sideways trend that's likely to play out
18:34 in the benchmark indices.
18:36 Soni, what are your top trades today?
18:40 So one would be Jubilant Food.
18:42 Jubilant Food seems to be sort of forming a rounding bottom pattern and trying
18:47 to bounce back from those levels.
18:49 So the support is immediately at 475, 473.
18:53 Then keeping a stop loss of 475, if it's able to take out a resistance,
18:57 you can see it heading towards 500 odd levels.
19:00 The risk to reward ratio is quite favorable because, you know,
19:03 just from 481 to 475 is your risk, and if it's able to pull it off,
19:08 it can head towards 500 as a short covering pattern.
19:11 This will be the first pick.
19:12 The second pick will be on Reliance.
19:14 Reliance, structurally, we can look at holding quite strongly.
19:17 So Reliance will be a buy on dips rather.
19:19 There are multiple support around 228.50.
19:22 So I think towards 2,900 to 2,850 on a positional basis will be a good level
19:28 to accumulate Reliance, keeping a stop loss of 2,800 and target of 3,000, 3,050.
19:34 Okay.
19:35 Amar, what about you?
19:36 What are you recommending to us today?
19:38 I would say the first is from the pharma space, and that's Lupin.
19:43 So Lupin continues to be very strong technically on the charts.
19:46 We've seen some sort of consolidation happening currently.
19:49 It's around 1,630 odd levels.
19:51 So any pullback in the stock towards 1,610, 1,615,
19:54 that can be a very good buying opportunity with a stop loss below 1,570
19:58 and a target of 1,685 on the upside.
20:02 And the second stock to look at is from the banking space, and that is SBI.
20:06 So SBI is one stock which is very strong technically on different time frames,
20:11 and also we've seen some significant amount of volume open interest also there.
20:15 So this is one stock, completes around 704 levels.
20:18 So any pullback towards 695, 700 can be a good buying opportunity
20:22 with a stop loss below the 680 mark and a target of 745 on the upside.
20:30 Soni, railway stocks have been seeing some selling over the last few days.
20:35 Do you think there could be a trade here either on the long or short side?
20:41 I think some profit booking we can see from the entire counter
20:44 and talking about IRCTC, which has clearly shown some shorts today.
20:49 I think from current level you can see that it can test 880 odd levels.
20:53 So I think one can definitely look for a shorter side in IRCTC
20:57 for a target of 880 keeping a stop loss of 940.
21:01 If it's able to take out 940, of course the shorts get negated.
21:04 I think this one opportunity can be seen.
21:06 However, for a medium-term positional play, this obviously looks quite strong.
21:11 It becomes later on as a buy on dips, but for a short-term perspective,
21:15 one can definitely attempt at a short for IRCTC, 880 target and 940 stop loss.
21:20 I also want to address what's happening in the oil and gas space
21:23 because there is a little bit of weakness coming in.
21:25 But remember, the oil and gas space has done very well off late.
21:28 And today we do have weakness in ONGC.
21:31 It's coming off life highs, in fact, today.
21:33 We are seeing a sharp knock of nearly 4.5%.
21:37 The question really is that are traders at the moment now booking profits?
21:41 And after that, is there a possibility that the stock could correct further
21:46 or are we expecting a consolidation?
21:48 I reckon that the probability of the stock moving higher at this point in time
21:52 is a lot lower.
21:54 Amar, what is your assessment on ONGC?
21:56 How would you address this?
21:58 See, ONGC, we are witnessing some sort of profit booking
22:02 because the stock has significantly rallied over the last, I would say,
22:07 five, six weeks.
22:09 And if you ask me, the trend continues to remain very strong.
22:12 But, yeah, this week's high is something which is going to be very important,
22:15 very crucial.
22:16 And if you ask me, the levels to watch out for is around 250 odd levels
22:20 from a short-term perspective.
22:22 Currently it's around 260.
22:24 So any pullback towards those levels, that can be a buying opportunity.
22:27 But, again, on the upside, it would be capped around 270, 275,
22:31 the recent highs.
22:32 Because this week's high is going to be very important for ONGC.
22:37 If that is taken out, then the stock is definitely headed towards the 300 mark.
22:41 Otherwise, we could witness some consolidation.
22:43 But the trend and momentum continues to favor ONGC as of now.
22:47 Right.
22:48 Soni, can you come in on HDFC Bank as well?
22:51 What's really happened here is that a few days ago,
22:54 when we had seen the sharp knockoff on HDFC Bank,
22:57 well, it made a low of around Rs.1,380 odd.
23:03 It's not too far off from that mark at the moment,
23:05 but it has seen a little bit of a recovery from lows of--today's intraday lows--
23:12 of somewhere around Rs.1,380 odd.
23:15 It's a touch and go.
23:17 And, of course, it's naturally a stock which has been on a clear downtrend.
23:21 The question really, Soni, is that are we expecting now
23:25 about a consolidation in HDFC Bank?
23:28 Can we, in fact, assess and perhaps determine that the correction is now over?
23:34 And based on that, can we play a little bit of a consolidation
23:38 perhaps using options and delta neutral strategies on this one?
23:43 I think, Agam, definitely it may consolidate for some more time.
23:47 The consolidation range is quite broad.
23:50 If I have to observe the options metrics,
23:52 1,400 straddle seems to be adding a lot of open interest.
23:56 You can see both call and put have got significant open interest additions.
24:00 On the put side, of course, 1,400 is holding out to be the highest.
24:03 So maybe there's a chance that if the weekly closing is above 1,420 today,
24:08 there could be a chance that HDFC Bank bounces back from these levels
24:13 and sees higher levels of 1,450, 1,460.
24:17 But not a lot of upside move also can be seen as per the option metrics.
24:21 There's a lot of significant call writing happened at 1,450 call.
24:25 So until and unless that range is not broken,
24:28 we may not see a significant movement on the upside.
24:32 Consolidation may continue.
24:34 So one can definitely go for option strategies like iron condor,
24:38 which protects your downside and the upside and plays for a good range.
24:43 So I think the range can be seen of 1,450 call,
24:47 and on the downside can be seen for 1,380 put,
24:50 just to be a little safer.
24:51 And similarly to hedge also,
24:53 one can look forward to 1,360 put buying on the hedging part
24:56 and 1,460 call on the call part.
25:01 So I think this iron condor strategy can be played out well for HDFC Bank for the moment.
25:06 All right.
25:07 And the other one that I also wanted to address was Coal India.
25:11 Let's pull that up because Coal India has also had a tremendous run.
25:14 And from what I can make is that at the moment,
25:17 we are looking at a broader profit taking, if I can, in fact, conclude that correctly.
25:23 Again, not unlike the stock that we've spoken about earlier.
25:29 Is it the same trend as compared to ONGC?
25:33 I would say that Coal India also is witnessing some sort of profit booking.
25:38 I think that's healthy, healthy profit booking.
25:40 And also what we are seeing is that some of the technical indicators are definitely
25:45 in very overheated territory.
25:48 So that tells me that there is going to be some sort of pressure there in the stock.
25:54 And also, if you look at the OI data, if you look at the different strikes,
25:58 we are seeing some sort of short buildup happening there because in the Feb, March,
26:03 and I would say the April series, we are seeing significant open interest being added
26:08 and we are seeing some sort of price correction.
26:10 But that's too early to say.
26:11 Overall, I would say still be on the buying side because the trend,
26:16 there is no significant change of trend.
26:19 On the downside, the stock would have support coming around the 410, 420 level.
26:23 So that's a level where we could witness some bounce back.
26:26 But again, this week's high is going to be important and crucial for Coal India as well.
26:32 Right.
26:34 With that, thank you very much, Amar and Soni, for joining us today.
26:38 Have a good Friday and we will see you next week.
26:41 In the meantime, the markets are doing their thing, trading close to 21,700.
26:47 It's not looking great.
26:48 In fact, extending yesterday's selling at the day's low point as we see it, 21,670 is what we have.
26:56 Agam, you want to comment on this, the pressures again intensifying as we go into the next few hours of trading?
27:00 Yeah, and I can also mark out the India volatility index, which has moved above the mark of 16 now.
27:06 And this, in fact, if I'm not mistaken, is at its highest level since June.
27:13 So, you know, the days of contracted volatility index are, I suppose, behind us.
27:20 And perhaps to unexpected lines, because it's going to remain at these levels through the course of the election period.
27:26 And I reckon that we may not see very low VIX levels from here on.
27:32 But on that note, it's a wrap on the F&O show, but lots more lined up on the other side.
27:37 Stay tuned to NDTV Profit.
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