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Transcript

00:00:00 has been above 4.3, trending above 4.3 quite firmly and that's not usually a very good sign

00:00:07 when it comes for emerging markets as well in terms of flows. So, that's on the back of higher

00:00:13 wholesale prices and a growing concern that perhaps Fed rate cuts, the alacrity and the size

00:00:21 of it were being overestimated and you've seen that sort of playing out. Crude has not seen too

00:00:28 much of movement either. They've been flat. Brent has been hovering around $83 mark. Even though

00:00:35 there is now a report that the US is trying to craft together some kind of a ceasefire in Israel

00:00:43 and Gaza friction, but we'll have to wait and see how that plays out. But like I said, Asia is the

00:00:48 big story and we'll just pull up and see what Asian markets are doing because China has cut

00:00:52 the five-year loan prime rate by 25 basis points to 3.95%. This cut is the first time since June.

00:01:01 So, that is pretty significant. The one year has been left unchanged, but no great action in Asian

00:01:10 markets. So, perhaps the cues will be domestic. Let's just see what happened domestically

00:01:14 yesterday and that pattern continues where you have FIIs either not participating much or selling

00:01:21 and DIIs the ones who are buying and you saw that happening yesterday as well. In fact, a month to

00:01:27 date in Feb so far, FIIs have net sold about 14,672 crores while DIIs have been the big buyer,

00:01:35 17,846 crores. That to me is quite interesting that you are seeing a rally without FII

00:01:42 participation right now. If you assume at some point that changes, do you see that movement

00:01:49 running? The implied open today showing a muted start up. Just very quickly before we go into

00:01:55 local cues, a city report on cold and crude, I think that's worth the mention. They have actually

00:02:00 said that you could see crude hit $100 a barrel by the start of 2025 and I think that is one thing

00:02:07 that the markets will eventually take heart from and I'll just say what they have, I'll quote what

00:02:11 they have quoted. They have said that another wildcard scenario highlighted is that oil prices

00:02:16 hit triple digits again which we haven't seen in over a decade. The catalyst for oil to hit $100

00:02:21 a barrel include high geopolitical risk, deeper OPEC cuts and supply disruptions from key oil

00:02:27 producing regions. They have also indicated that there is an off chance that gold could hit $3,000

00:02:33 per ounce in the next 12 months. They believe aggressive purchases, stagflation and a global

00:02:39 recession that still could be on the cards are a few factors that could spur up the buying for the

00:02:45 safe haven asset. So, just worth the mention before we move on to local cues, it was interesting,

00:02:51 mixed picture by the time we closed, lots of volume led losers towards the last few hours of

00:02:55 trade. Yeah, yeah, absolutely and the broader markets is something which is going to be in

00:02:59 focus yesterday, but I'm going to start with benchmarks. Now, we are interestingly poised

00:03:04 because sure we made new life highs yesterday. Also, we continue to see base building around the

00:03:13 22,000 mark and this is for the second straight day. Also, over the past three or four weeks,

00:03:19 we have tested 22,000, but we've been unable to sustain about 22,000. This is for the first time

00:03:25 that we have in fact closed above 22,000 which also strengthens that bit of support going in.

00:03:33 Now, should we come off below 22,000 now, it's going to be a challenging time for the bulls then

00:03:41 and bulls are going to try and defend this particular mark with all their might at the

00:03:46 moment. And why I say this is because the kind of writing that we have seen around the 22,000 mark

00:03:53 over the past two sessions, a significant amount of put options being written around 22,000 and

00:03:59 22,100. Moreover, the other factor that perhaps could play out is that FIIs at this point in time

00:04:08 in index futures are 61% net short. Now, should we see the Nifty sustain at these levels,

00:04:16 there is a high chance that there will be some more short covering and under those circumstances,

00:04:22 that could lead the markets even higher from these levels. Now, again, I'm not suggesting that I'm a

00:04:28 permanent bull, but this is what the factors are indicating and at the moment, while sure we can

00:04:34 see a day or two of weakness, of course, the implied open is also indicating declines earlier

00:04:39 on the start of the day. 22,000 is going to be a hard one to take out and if we do see 22,000

00:04:46 being taken out convincingly, well, then we are in a little bit of volatile period for sure. But

00:04:54 that again continues to be a crucial one, at least as far as this week's expiry is concerned going in.

00:05:01 Indeed, it's going to be an interesting morning. That's the implied Nifty indicating to a flat,

00:05:05 to slightly lower start. Lots of stocks that will be in focus this morning. Just a quick word,

00:05:11 the Wix as well, I think in the second half of trade jumped quite sharply. So, you saw 5.5%

00:05:15 spike on the Wix taking to deltas of 16, which generally indicates that the markets are turning

00:05:22 a lot more volatile than we have liked. So, 16 on the India Wix is what we had. There will be a

00:05:27 whole bunch of stocks, a whole bunch of block deals as well that hit the markets yesterday. But the

00:05:31 biggest story yesterday evening was about Whirlpool. Let's watch out for how the stock is

00:05:36 doing. They have reported and notified to the exchanges that this could be on the cards. Of

00:05:43 course, they talked about this on the 30th of November, where the management of Whirlpool

00:05:47 had indicated that the promoter may look to sell 24% stake in the company. Remember, the global

00:05:53 holding company owns 75% stake in the Indian subsidiary. Promoters will continue to retain

00:06:00 majority stake even post this stake sale. Whirlpool Mauritius will be the selling shareholder and the

00:06:07 whole idea of actually liquidating some equity in the local company is to ease out some debt. So,

00:06:13 high levels of debt on the books of Whirlpool India is of course, what's leading the management

00:06:18 to offload some of their stake. Well, the price that they are looking to repay or the loan amount

00:06:24 that they are looking to repay is about $500 million. Goldman Sachs is the sole broker on

00:06:29 this deal and the floor price of the block deal is set at Rs. 1230 a share. So, watch out for this

00:06:35 one. This will be hitting the street soon and we will be getting a notification of that as and when

00:06:40 that happens. The price, remember, is at a discount. So, you will see pressure on the counter

00:06:45 from the get-go this morning. The other one to watch out for is Zee Post reporting its earnings

00:06:51 last week. The stock has been unfortunately selling off. It's been under pressure pretty

00:06:55 much every day. It also remains in an F&O ban, which of course, Agam can talk about in a little

00:07:00 more detail in a few minutes. But the big headline across newspapers this morning is that they have

00:07:06 re-engaged with Sony to revive the merger. Representatives from both sides have held

00:07:11 meetings across Bombay. Major differences are expected is what they are trying to sort out.

00:07:17 Both sides are sticking to their positions. So, no clarity yet whether it's a done deal,

00:07:22 but conversation has restarted and that could be a positive trigger for the counter trade this

00:07:28 morning, especially after the sell-off we've seen from Rs. 200 to Rs. 178 in the last few days of

00:07:34 trade. Well, another smaller company but worth the mention could be fairly active in early trade is

00:07:38 NBCC on back of a massive order win to the tune of Rs. 369 crores. You also want to watch out for

00:07:45 sugar stocks this morning. Sugar production is expected to see a downside due to lower rainfall.

00:07:51 Low rainfall will lead to lesser sugarcane plantation on back of which your whole bunch

00:07:57 of sugar counters, which are usually active ahead of elections, may be seeing some more activity in

00:08:03 today's trade. Just on Zee, again, it continues to be a counter which is very responsive to news

00:08:12 flows but one has to wonder why Sony would go ahead and change its stance. Has anything changed

00:08:19 specifically for Sony to change its views? So, that's going to be one volatile counter as well

00:08:24 today, definitely. Coal India is the other one that we have to talk about. I mean, that stock

00:08:30 took a nosedive at the end of trade yesterday and you can see that on the chart where it had

00:08:36 quite a tough afternoon because of an analyst call that the management was having forced numbers.

00:08:42 Now, what spooked investors was a cut in guidance by the management on their production target,

00:08:49 not massively, basically from 780 metric tons to 770 metric tons but they also said that their

00:08:55 e-auction premiums are going to have fallen to 45% in Jan. So, for perspective, that was 117%

00:09:03 in all of Q3 and these premiums contribute 15% to the top line in the December quarter.

00:09:11 To match up that cut, Coal India will have to bump up the volumes. Now, some brokerages think

00:09:18 that they will manage to do that. MK is fairly bullish that it will manage to bump up those

00:09:24 volumes. Modela Lozpal has reiterated a buy on Coal India with a price target of Rs.520,

00:09:30 where they say that there are slightly trimmed estimates of e-auction revenues for the next

00:09:39 financial year but volumes could make up for that. So, will you see a recovery in that stock

00:09:45 is the question. Coal India, definitely one to watch out for. Kotak Maindho Bank would be the

00:09:50 other one. They have announced quite a rejig in their management and remember, for Kotak Maindho

00:09:56 Bank, the question always has been about leadership and who the next rung is or what the next rung

00:10:02 looks like. So, Devaan Ghiwala has been appointed as CFO, Milind Nagnur appointed as COO. MK has

00:10:10 set a price target of Rs.1950. They have also mentioned how KVS Manian has been elevated as

00:10:18 joint MD and Shanti Ekambaram as DMD. The rejig is important because it could alleviate any

00:10:25 immediate risk of top management attrition, which is a concern in the private banking space

00:10:30 as well. Godrej Consumer is the other one perhaps that we should watch. The company will be divesting

00:10:37 stake in its Mauritius-based unit, that's Godrej East Africa Holdings. Not a massive sale,

00:10:42 consideration of about Rs.30 crore and that entire stake sale will be completed by

00:10:48 quarter four of this financial year or quarter one of FY25. But Godrej Consumer, remember,

00:10:55 even through Q3 has been a bit of an outlier in terms of positive performance compared to the

00:11:02 rest of their peers in that space. So, Godrej Consumer definitely could be on the radar.

00:11:08 Right. Well, and I have two stocks, only two, but both of them are at a life high,

00:11:12 and so which is why I'm really excited to talk about them, both smoking hot. First one is Dixon

00:11:18 Technologies at a life high. We have seen intraday volumes of the highest in two months. And February

00:11:23 futures looking at an 8% increase in open interest towards fresh longs, which means there's still,

00:11:28 it does seem like there's more legs to this rally. Yesterday's lower range was around Rs.6400 per

00:11:34 share. And that's where you could potentially see a near term base building in. And the second one

00:11:39 is a cash market stock. That's MRPL. And I'm sure that literally no one in this market has missed

00:11:46 out on this one because it's literally moved up 57% in just three sessions. Then this cash market

00:11:54 stock has also seen the highest weekly volumes since back in June. And well, there's no point

00:12:00 talking about the base because the base at the moment is about 50% from current market levels. So,

00:12:06 these are the two stocks which look like they are in very strong upward momentum, and bears will have

00:12:13 to be just a tad bit wary of how things are panning out here. And a quick update as well, because

00:12:20 those were the very active stocks. And Agam, you've got to be able to tell us what F&O data says could

00:12:23 be the next MRPL in terms of movement this morning, right? If only, yeah. But a new listing that you

00:12:29 want to watch out for, you've got Vibhor Steel Tubes that will debut on the exchanges today.

00:12:34 The premium in the grey market is indicating to 85% to 90% premium to the IPO price. So,

00:12:41 we should be expecting a listing of Vibhor Steel Tubes at about Rs. 151 in today's trade. So,

00:12:48 you've got that. And a whole bunch of block deals as well hit the markets yesterday. We will talk

00:12:52 about that in a little more detail. You've also got a few earnings to watch out for. So, ABB India,

00:12:57 Unsell Properties and Infrastructure, Gammon India, and Elantis Back India. So, smaller companies,

00:13:03 of course, ABB is a big one, will be reporting to towards the fag end of the earnings season.

00:13:08 Just one more I wanted to add on the stocks list, just because I thought it was an interesting

00:13:13 story. And the entire tech pack was facing weakness yesterday is LTI Mindtree. They have

00:13:18 launched a generative AI-powered autonomous sourcing platform called NaviSource, which will

00:13:25 reduce their procurement costs by 15%. And the reason I found it interesting is because in that

00:13:29 whole AI game, the Indian companies are still to show their full metal. So, LTI Mindtree perhaps,

00:13:37 an interesting story. It would be great to speak to them to understand what this plan is as well.

00:13:42 Well, certainly. And of course, the other stock that's continues to be in focus and has been over

00:13:47 the course of the last one, one and a half months is HDFC Bank. And we have more updates and for

00:13:52 good reason, but I'm going to hand it over to Harsh to take us through what our editor's cut

00:13:58 on HDFC Bank is going to be. Harsh. Yes, Agam, thanks for that. Of course,

00:14:04 no surprises here with regard to what we have on editor's cut today. I have the pleasure of having

00:14:09 Vishy right alongside to try and break this down, try and give more perspective, more color

00:14:15 on all that's coming out from the commentary. Of course, trying to allay concerns, Vishy,

00:14:20 with regard to a whole host of factors. But we'll try to focus in on three, four key factors

00:14:26 that one needs to look out for in terms of the commentary. Let me first start off with

00:14:31 what he suggested or what Sashidhar Jagdishan, who is the CEO MD at HDFC Bank, suggested with

00:14:39 regard to communication gaps, because that has been the key criticism that's come out,

00:14:44 Vishy. And, you know, with regard to this communication gap, acknowledgement,

00:14:49 is it a step in the right direction, in your view? So a few things that he said, which was that first,

00:14:55 be patient with us. Q3 is not indicative of what the future is holding. The bank managers also

00:15:01 focus on continuing with profitable growth, and that's going to be the focus. EPS over loan growth

00:15:06 always. What is interesting here is the acknowledgement itself, because, you know,

00:15:12 we have been saying it here in this very studio, that the bank's management is not driving the

00:15:18 right kind of narrative as far as HDFC Bank's results is concerned, as far as the kind of

00:15:23 outlook on the numbers are concerned. So now you have the CEO coming and saying that, listen, I get

00:15:28 it. Our narratives were not so great. We will try and fix everything. And we are being humble in

00:15:34 accepting that there is an issue with the way story was built versus what played out. I want

00:15:41 the viewers to have a look at what exactly the CEO of the bank said while he was talking directly

00:15:47 to investors. Our narratives could have been better. And I take it upon myself that it's a

00:15:55 learning for me. So with all humility, I do reckon and we will be focused, as I said,

00:16:04 we'll have our single-minded focus is to create a very sustainable franchise. And our focus is

00:16:11 going to be on profitable growth. And that's the only metric that I'm going to be looking at

00:16:16 for years to come, and especially during the period of transition.

00:16:20 We will not disappoint you that I can assure you that.

00:16:25 Right. Vishy, you feel comfortable with the fact that he's acknowledged the mistake and probably

00:16:34 there's going to be a pair work on the anvil, especially with regard to more clearer guidance

00:16:39 coming from them? The only way to repair this is to have a greater, better Q4. I mean, honestly,

00:16:45 there's just nothing else that anybody expects from the management than to deliver on the results

00:16:51 on numbers on business metrics, because at the end of the day, what else does matter, right? But

00:16:56 having said that, this was like a one hour long conversation between Goldman Sachs and the HFC

00:17:01 Bank CEO. And the one point that he kept saying is that the metric I'm looking for is EPS. I want to

00:17:06 ensure that our earnings are strong and thereby EPS is looking strong, because that was one of

00:17:11 those points that was brought up during the results that you had an EPS dip for the first

00:17:16 time in a decade, you know, on a year on year basis. That was something that's unexpected out

00:17:20 of HFC Bank. So management is clearly saying that's our core focus. We will ensure that those

00:17:25 numbers are remaining strong. And that is the correct way to look at it, right Vishy? Now,

00:17:30 the other metric which he spoke about was deposit growth. This has obviously bothered the street in

00:17:35 a big way, because if deposits don't grow, just for perspective, if deposits don't grow well,

00:17:42 then it will impact loan growth, and therefore will impact profitability and the like, right?

00:17:48 Let's firstly, Vishy, let's go across, listen to what Shashi had to say with regard to deposits.

00:17:55 We realize that effectively, we pre-porn the loan growth. So I need to now have that period of

00:18:05 I would say, what do you call it, transition time to warm up the engine to raise that amount of

00:18:14 equivalent granular sustainable funding to be able to substitute some of the bond maturity so that I

00:18:22 can have a reasonable amount of share moving up and sort of matching with that of the loan market

00:18:33 share. Obviously, it's not going to happen overnight. It's a kind of a glide path that

00:18:38 we have to, we will be seeing. In the meantime, obviously, you know, whatever I raise,

00:18:46 if I raise a lot more than I have enough to maintain reserves, I'll have enough to pay off

00:18:53 the bond maturities or the loan maturities that will come up there and the balance will deploy it.

00:19:01 If I have constraints because of the monetary policies or monetary situation,

00:19:06 liquidity situation, the system being rather tight, to that extent, it will be much lower.

00:19:11 But yet, just by repayment of the high cost borrowings, you will see

00:19:20 the trajectory of profitable growth continuing. Now, very interesting thoughts coming through,

00:19:29 Vishy. He's not spoken about his reduced guidance on branch count, but he seems quite comfortable

00:19:35 with regard to deposit positioning going forward, at least.

00:19:40 So, he did make a point about branches later on during this one hour long conversation. But

00:19:45 the point that we're trying to make is that, you know, it is core to our business to grow our

00:19:50 branches and eventually you will start seeing some of the operating leverage kick in. And that will

00:19:56 sort of explain to the market why exactly they're going after branches. Having said that, on the

00:20:00 granular deposit, I want to make it a point. So, he's saying the first priority on raising these

00:20:06 granular deposits is to pay off your high cost deposits or high cost borrowings that came from

00:20:11 HDFC Limited. Once you pay it off, you ensure that your reserves are strong enough and then you

00:20:15 deploy. So, loan growth is clearly taking a backseat. I mean, even with the EPS comment,

00:20:19 he said that I'm going to prioritize EPS over loan growth. So, it's very clear that the bank

00:20:24 is not looking at growing very fast on the loans at this stage. They will grow, of course, they

00:20:30 want to maintain that 18 to 20 percent market share on incremental lending. Having said that,

00:20:34 the focus clearly is on granular deposits because obviously that's the need of the hour. LDR is out

00:20:40 of control at this point in time. Incremental LDR, they have to maintain at a reasonable number.

00:20:44 They have to also ensure that the high cost deposits are taken off their balance sheet and

00:20:50 thereby, according to the management, when you take out the, as you start repaying these high

00:20:57 cost deposits, you start seeing profitability come back into the balance sheet because obviously the

00:21:01 cost metrics work in favor of the bank. Correct. Absolutely, Vishy. And that takes me to margins.

00:21:08 Where do margins really lie? Now, he's suggested that margins x HDFC Limited is roughly in the 4

00:21:14 to 4.4 percent band. Firstly, let's listen to what he had to say before we start and give

00:21:19 more perspective on that. Minus of the foreign body that has come in, which is the book from HDFC

00:21:26 Limited, there was a certain band at which we were operating. I think somewhere between 4 and 4.4

00:21:34 for a long period of time. If you look at it, minus of that, we continue to maintain similar

00:21:42 kind of a thought process. Why? Because we know in periods of tight liquidity, in periods where

00:21:49 the funding is scarce, the rates will move up. So, we have the right balance of what we need to

00:21:56 do in terms of risk-based pricing and this is not something new. We have been doing it for a long

00:22:00 period of time and I am sure, you know, Srini would have done it and his earnings call as to how many

00:22:07 we let go as well. For the risk appetite that we are comfortable, I think the pricing is more or

00:22:16 less right. So, yes, it is going to be tight. We are constantly, the only element, assuming my

00:22:24 expected, the risk appetite continues to be the same or the expected credit loss is the same,

00:22:31 the only thing that is changing the risk-based pricing model is the cost of funds. So, to that

00:22:36 extent, you will see constantly our Asset Liability Committee management constantly raising the

00:22:46 threshold level so that we do not sort of, you know, go down the margin ladder.

00:22:52 Incrementally, I think we are reasonably sanguine that we should manage that. As I said, we are not

00:23:01 in the quantity game at all. We are not, we do not want to grow just for the sake of share, market share.

00:23:06 Again, the thoughts here, Vishy, seem to be quite interesting. If he is going to replace

00:23:14 his current liability base with deposits, margin should go up regardless of where loan growth lies

00:23:20 and which should impact EPS. Correct. Yes, it is true that once you start

00:23:26 replacing your high-cost borrowings with lower-cost deposits, then margin should improve

00:23:31 in general. Having said that, he made one more point. He does not want to grow for the sake of

00:23:35 growing. Correct. Right. Again, comes back to the point that loan growth is not the primary driving

00:23:40 factor for the earnings trajectory that he is setting. He is saying that we will ensure, because

00:23:45 there is a transition period. So, he is very clearly guiding the market. There is a transition

00:23:48 period. In this period, we will fix the cost problem. We will fix the liabilities issue.

00:23:54 Then we will focus on the loan growth part. But no timelines given, Vishy. That is one concern

00:23:59 that continues to at least, you know, mar me in terms of, I am a bit of a skeptic on that

00:24:05 particular account. No timeline given. Also, Vishy, very quickly, will this allay investor fears?

00:24:12 So, his ask of the investors is that you should remain patient, look at Q3 as a sort of an anomaly.

00:24:21 Q4 onward, you are going to start seeing better numbers. But the problem that you raised,

00:24:26 which is timelines. For a high execution, top bank management, lack of timeline is an issue. And

00:24:35 maybe the investors will take it differently. Maybe they will look at it from a point of view

00:24:38 of, oh, at least now he is sobering the narrative. So, it may be better off. I would like to see

00:24:45 some amount of detail in terms of when exactly this transition period ends and when does a

00:24:50 growth period for the bank starts. Absolutely, Vishy. So, one is timelines. The other one is

00:24:55 with regard to just the fact that there was, how can a bank as large as HDFC Bank not have visibility

00:25:02 on tight liquidity situations, which arose in October to December, which is what he continues

00:25:09 to allude to. But of course, we need to wait and watch how markets respond to this. Investors are,

00:25:14 of course, and markets are the ultimate barometer to decide what this commentary really means and

00:25:22 how they assess it. But that's all we have on the Editor's Card. Thank you so much, Vishy,

00:25:28 for breaking that down for us. We have FNOQs on the other side. We'll slip into a very,

00:25:33 very short break. Stay tuned.

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00:29:05 Welcome back. You're watching India Market Open.

00:29:08 For the first quick check of the top headlines this morning,

00:29:14 global cues are largely muted with US markets shut, Asian equities trade mixed, Indian markets,

00:29:21 on the other hand, continue to break records. Analysts say Indian markets are at the cusp of

00:29:27 a breakup. China's central bank cuts its benchmark five-year loan prime rate for the first time since

00:29:33 June. This comes as an effort to loosen monetary conditions further. And in corporate news,

00:29:39 world pool promoters to sell 24% stake in their India unit at a discount of 7.6% to its closing

00:29:46 price yesterday. The field size is valued at 3,600 crores. And Coal India shares dip 5% as

00:29:53 a company misses production targets and the e-auction premium fails. Well, farmers reject

00:29:59 Center's proposal, say they will resume the march to Delhi from Wednesday. Well, those are the top

00:30:05 headlines of your tracking as we cure you up for trade this morning. But remember, it's been five

00:30:09 straight days of gains coming for D Street and Agam is standing by with more on that. Agam,

00:30:14 what is the F&O data indicating? Because while we did make an intraday high, we could not sustain

00:30:18 in those levels. And the last few hours, the picture turned quite mixed actually. Yeah,

00:30:23 it was a mixed picture at least in the last one hour of trade certainly. At the moment, however,

00:30:28 a lot of the cues are playing in favor of the markets at least sustaining at where they are.

00:30:33 So potential consolidation, that's a question that we do need to ask. More strength on the

00:30:39 cards, that is also not improbable at the moment considering the way things are panning out as far

00:30:44 the markets go. So we did see the Nifty advance by around a little less than 0.4%. Open interest

00:30:50 addition seen as far as your index futures go, not a very large amount, but one addition all

00:30:55 the same to as long as the Bank Nifty did see about a short covering. Bank Nifty is not around

00:31:01 its life highs at the moment. So it does need to see a little bit of a catch up. But we're seeing

00:31:06 about a short covering there as well. Now, in terms of the options market, well, naturally

00:31:11 considering the Nifty moved higher, we saw a lot more traction with respect to writing around the

00:31:17 puts. So as you can see here, 22,000 and 22,100 puts seeing the most amount of writing action

00:31:22 coming through. And on the higher end, we started to see a little more activity beginning to come

00:31:27 through around 22,600. That brings me to your max OI. Now, at the moment, we are looking at 22,000

00:31:34 put as the one with the maximum open interest, and that should serve as a little bit of a base

00:31:37 in the near term. And on the higher end, keeping an eye on around 22,600, 22,500, 22,600, that's

00:31:45 where we're seeing a little more accumulation as far as overall call, you know, is call,

00:31:50 options are concerned. But speaking of the Nifty finance, Fin Nifty expiry, again,

00:31:57 we're keeping an eye on 20,600, 20,700, where we have seen a lot more in terms of calls accumulation.

00:32:05 But keep an eye on that one as we move into the weekly options expiry. And finally, moving on to

00:32:11 stocks, let's take a look at all those which saw shots yesterday. SBI Life and Lupin, on the other

00:32:17 hand, long seen in Dixon Technologies, Bajaj Auto and Metropolis Healthcare. Dixon Technologies,

00:32:23 of course, at a new life high there. And in terms of stocks which are unwinding coming through,

00:32:28 we did see short covering in IRCTC, Maruti Suzuki and M&M, even though M&M may not necessarily have

00:32:34 seen short covering, because it's already at a nearer life high right now. And of course,

00:32:41 longs unwinding for Nalco and Federal Bank. So, plenty of counters out there to keep an eye on,

00:32:46 but it's certainly an interesting time as far as benchmarks are concerned. So, let's talk about

00:32:51 that. And let's get in an expert then. We have Amit Goel of Amit Ventures joining us on the show.

00:32:57 Amit, good morning. Thanks for joining in. Well, Nifty is at a life high at the moment.

00:33:03 How are you trading the benchmarks? What would your idea be? How would you go about,

00:33:09 you know, deploying money here? Yeah, good morning to Agam and all my viewers.

00:33:15 Thanks for having me here, Agam. How would I trade Nifty here at lifetime highs? The obvious

00:33:20 answer would be, be long till we go short, right? Nifty has inched its way up towards a new all-time

00:33:27 high. While I would have expected that there could be a breakaway gap, which is not really

00:33:34 manifesting itself because the biggest contributor, which is Bank Nifty, has not been along with it.

00:33:41 It has not been riding along with Nifty. So, I am not expecting any breakaway gaps in Nifty.

00:33:48 I am seeing a lot of exhaustion in the current trend. If you look at some of the technical

00:33:51 indicators like ADX and all, they are not really pointing towards the sky. And so,

00:33:56 while the bias is on the long side, I am not expecting a tear away gap as such because the

00:34:03 non-performance or the non-contribution of Bank Nifty. So, while I would look to, you know,

00:34:09 set up a simple bull put spread by selling the 22,000 put because, as you mentioned,

00:34:16 there is a lot of put interest, open interest at the 22,000 level and I believe the bulls would

00:34:22 look to defend the 22,000 for this and for the next expiries. So, the bias would be on the long

00:34:29 and I would look to do a bull put spread at 22,000 put levels. Okay. So, Amit, you did briefly allude

00:34:38 to the Bank Nifty and the relative underperformance. I believe you do have a view on State Bank of

00:34:45 India. Are you playing a little bit of a divergence play because I believe that State Bank of India has

00:34:50 outperformed the rest of the peers? Correct. So, very clearly, this is a simple time decay play.

00:34:58 Since we are near the fag end of this long expiry of February, doing a leap year nonetheless,

00:35:05 what I am really looking to do here is basically play on the increased theta decay as we come

00:35:12 approach the expiry. So, this is a simple play here. We have already seen a breakaway gap in

00:35:18 SBIN and if you recall, on the 1st of January when we had met for the morning session like today,

00:35:25 I had clearly mentioned that SBIN happens to be my pick of the year in the latch caps

00:35:30 and I kind of stand validated from 600 levels. It is at nearly 800. So, I am very happy with

00:35:35 that performance. But what I right now feel is on account of this theta decay, I would like to

00:35:41 simply play a non-directional setup in SBIN wherein I would like to set up a 740 and 780

00:35:49 strangle, 740 put. I would like to sell the 740 put and sell the 780 call, which is essentially

00:35:55 known as a short strangle. But traders who are uncomfortable with the unlimited risk nature

00:36:01 of a short strangle could consider buying the offsets at 720 put and 800 call. The maximum

00:36:07 profit in about 1 week to 8 days would be about 11,325. Again, we are getting these kind of

00:36:15 premiums simply because the implied volatilities are elevated and the risk at either of the breach

00:36:21 of the break-evens, which is at 732 or 787, the risk is around 2500. With the margin deployment

00:36:28 of about 1 lakh rupees, the ROI works out to about 12%. This is a very interesting strategy

00:36:35 because what Amit is looking to do is exit at around break-even points at the point of which

00:36:40 you are not making a significant loss. And well, of course, the upside is tremendous. And

00:36:46 should you in fact see SBI expire within those two levels, well, you are likely to make a return

00:36:54 of around 12% based only on the margin that you are deploying. And this is, of course, over the

00:36:59 span of the next two weeks because we just have two weeks from here and expiry. That said, Amit,

00:37:04 you also have Reliance Industries on your radar. Yeah, again, a similar setup. I am looking to

00:37:12 not really look at the directional angle here since I am seeing the broad markets not giving

00:37:18 a tear away gaps. So I do feel that we would be in a zigzag kind of a formation. Even if you look at

00:37:25 Reliance, while it is drifting up, there have been days of greens and reds on the price action.

00:37:32 So what I am looking here again is to capture the essence of theta decay since we are again

00:37:38 nearing the expiry. So the similar setup as SBI wherein I would like to set up a short strangle of

00:37:46 2900 put and 3000 call while I would buy the offsets at 2840 put and 3060 call, giving a

00:37:56 maximum profit of about 6000 rupees and stop loss at either of the breach levels, break-even levels

00:38:04 is about 1500 rupees. So with a deployment of 60,000 rupees margin, the ROI works out to a cool

00:38:11 10%. So this is a pure theta decay play and not really taking a directional bet on the

00:38:16 stock. Right. Amit, just a follow-up operational question on both these strategies. It just so

00:38:24 happens that when you reach the final day of the expiry, if you let your options expire, of course,

00:38:33 you will probably be expected to give some amount of delivery because these are stock options.

00:38:39 The other alternative in this case is that you try and exit before the expiry, maybe a day before or

00:38:47 maybe an hour before expiry. But under those circumstances, you don't always get the premiums

00:38:55 that you are expected to get because of certain liquidity issues which you don't see in indices.

00:39:00 How do you address this issue here? So ideally, if I were to trade these stock options,

00:39:09 if you've noticed the pattern that I have been following, Adam, I have always stuck to large

00:39:15 mega caps in stock options where the liquidity is profound. I'm not looking at trading Zydus Life or

00:39:22 any of those for an example sake. So while I feel that the liquidity is going to be fairly good in

00:39:28 the counters that we have discussed now, but as a thumb rule, as a good practice, as an options

00:39:33 trader, I would look to take my exits, whether in profit or in loss, in a stock option trade on the

00:39:41 Monday or maximum on the Tuesday of the expiry week in order to avoid the gamma risk and also

00:39:47 the liquidity issues. We might find exiting one of those legs, we might give away a lot of our

00:39:54 accumulated profits in a part of sleepages. So I would definitely look at exiting and not really

00:39:59 wait till the expiry date on Thursday or Wednesday. I would ideally, on a comfortable level, exit on

00:40:06 Tuesday or Monday late because by that time, most of the credit is already accrued. If the trade

00:40:13 plays out in your favor, you're already making 80% to 70% of the maximum credit in that setup.

00:40:19 So there is not really too much to the additional incremental risk reward is not in your favor for

00:40:26 the last two days. So why be in that position? Fair enough and very, very well put, Amit. Thank

00:40:32 you so much for that explanation. Of course, also thank you for joining us and giving us your views,

00:40:38 also giving us a couple of trading ideas. Well, that's two trading large cap ideas,

00:40:45 of course, both Nifty counters that we have for us. And with that, Samina, it's back to you.

00:40:49 Thank you, Agam. That is the EFNOS update coming in this morning and stock ideas

00:40:55 from our EFNOS guest. A quick check on how implied Nifty is looking after five straight days of gains.

00:41:01 It is expected to take a break in early minutes of trade. Implied Nifty indicating to a cap down.

00:41:06 Remember, we don't have too many cues coming in from Wall Street as those markets are shut on

00:41:10 back of President's Day. Well, there's going to be one stock that will be in focus from the get-go

00:41:15 this morning and that's Whirlpool. We have news or reports and confirmations coming from the

00:41:21 promoters, of course, where Whirlpool promoters are expected to sell 24% stake in the India unit

00:41:28 at a 7-point discount to its closing market price yesterday via block deal. Mahima is standing by

00:41:33 with more on this. Mahima, the management had indicated that they would be looking to do this

00:41:38 three months ago, if I'm not wrong. This time around actually executing, not just talking.

00:41:44 Right, Samina. As you rightly mentioned, on 30th of November, 2023, there was an exchange filing

00:41:50 which said that Whirlpool Corporation will part 24% of its stake in Whirlpool India.

00:41:55 And now today we have news from sources that they will be selling 24% of the stake via block deal.

00:42:04 So Whirlpool Corporation holds 75% at present in Whirlpool India. So even if they sell 24% stake,

00:42:11 they'll be still holding the majority stake of 51%. Now Whirlpool Mauritius will be the

00:42:17 selling shareholder here and Goldman Sachs is the sole broker for this deal. Now talking about the

00:42:22 transaction stake value, the floor price is set at 1230 per piece, which is at a 7.6% discount

00:42:29 from its yesterday's closing price. And 30.44 million shares will be exchanged and the total

00:42:36 value of transaction stands at approximately 3,700 crores. Now the purpose of stake sale is

00:42:41 that Whirlpool Corporation wants to improve their debt positions. They want to repay their debt

00:42:46 levels and enhance their balance sheet flexibility. Also, the stock has fallen approximately 12.9%

00:42:55 since their exchange filing on 30th of November. And if you talk about Whirlpool Corporation,

00:43:01 in the recent SEC filing also they've mentioned that their debt stands at approximately $6,400

00:43:07 million and they want to repay approximately $500 million of their debt in Q4. And overall also

00:43:13 stock performance of Whirlpool India if we see has not been very good. One month the stock has

00:43:19 been hardly up 1.8%, six months it's been down almost 6.5% and one year it's hardly been up 2.7%.

00:43:25 So this will be one of the key stocks to watch out for today. Let's see how the stock pans out to be

00:43:31 after the sale happens. It'll be interesting, Mahima. It'll be a stock we'll all be watching

00:43:35 out for from the get-go on Whirlpool, a big block deal expected as the promoters,

00:43:40 which is Whirlpool Mauritius, looks to reduce its debt by liquidating some of its holding

00:43:46 in the local entity. Remember, they will still be the largest shareholder, but of course,

00:43:51 from a 75% holding that number now will come down to close to about 51%, making them the majority

00:43:58 shareholder. Well, along with that there'll be a whole bunch of other names. HDFC Bank as well

00:44:03 will be active in today's day of trade, may be getting a break and a breather from all that

00:44:07 negative commentary after the CEO MD addressed the investor meet and talked about being cognizant

00:44:16 and of course, indicating that they have and will communicate better going ahead.

00:44:22 Bernstein of course, has upgraded the counter to an outperform and continues to hold their stand

00:44:26 on HDFC Bank. Well, along with that talking about upgrades has also been a downgrade.

00:44:32 One stock that disappointed the street when it reported its earnings was UPL. UPL's third quarter

00:44:38 revenues were down over 28%. Year on year, EBITDA margins were down a percent due to the ongoing

00:44:44 industry destocking, channel rebates and high cost inventory liquidation by UPL. Well, we have with

00:44:50 us Akash Gupta, Director Corporate Ratings, Fitch Ratings, who joins in to talk to us about what his

00:44:55 concerns are about UPL. Hi Akash, good morning, thanks for joining us. Akash, you seem disappointed

00:45:03 with UPL, there's been a downgrade from Fitch. You want to talk to us about what has led to this,

00:45:08 because there is a sense that maybe they're turning the corner, the cycle of destocking

00:45:14 may eventually be coming to an end. Sure, so let me talk about the downgrade rationale first and

00:45:21 basically what we saw that we saw was UPL's leverage has been elevated since it made the

00:45:27 first acquisition back in FY19. So we expected rapid deleveraging and that did not happen.

00:45:33 Additionally, last year, industry conditions worsened and we saw demand being weak due to

00:45:38 destocking, as you mentioned, and supply increasing due to capacity additions in China. So we now

00:45:44 estimate that UPL's leverage will remain elevated in FY24 and FY25 and decline gradually. So a

00:45:52 weaker financial profile and risks on the supply side in the industry are behind our downgrade.

00:45:57 Which will continue to be a concern, how long was this on your watch list to begin with and

00:46:05 what happened this quarter that led you to act on your, of course, downgrade?

00:46:12 So UPL has been on a negative outlook for a couple of years now. There were issues earlier about

00:46:18 working capital increase. If you remember in the last quarter of FY22, there was a significant

00:46:26 increase in UPL's working capital. And then since last year, they have been saying that the industry

00:46:34 conditions are not great. There has been destocking at the distributor level. We also think that the

00:46:39 supply side risks have sort of taken a toll on UPL's performance. And now we see that these risks,

00:46:47 although they should abate over the next few years, they will, nonetheless, the deleveraging

00:46:55 will be gradual. And that is one thing that we have sort of factored in our rating action.

00:46:59 Going ahead, this downgrade is only going to make it tougher for UPL to go out and raise

00:47:04 low quality funds or debt in that sense, right? I mean, it's a little bit of a cat and mouse that's

00:47:12 going to play out now. So while this downgrade has happened, I'm assuming if UPL fulfills a few

00:47:17 conditions, goes out and deleverages, which is going to make it tougher, like I said, post your

00:47:22 D rating, how do you expect this to play out in the foreseeable future if the fundamentals of the

00:47:28 industry actually improve? So, I mean, obviously, UPL remains a good quality credit, maybe not

00:47:37 investment grade, but yeah, I mean, the business fundamentals remain strong. And UPL is also

00:47:43 undertaking initiatives to deleverage in the form of capital raising. We know that it has, the board

00:47:49 has approved a rights issue. The company is also talking about raising additional capital in its

00:47:54 various business verticals. So I think over the next few years, these capital raising initiatives

00:48:01 should help it deleverage. As I said, we also expect industry conditions to improve. And with

00:48:08 this, hopefully we'll see better financial metrics and that should be reflected in our ratings as

00:48:15 well as its financing costs. Prakash, any concerns? I mean, I know it's sounding very negative here,

00:48:22 but any concerns on, you know, failing or defaulting any of on that outstanding debt that

00:48:29 the company has? I do understand that the cycle of destocking is improving, that should be coming

00:48:35 to an end. But just give us perspective, right? Because I know investors generally have been

00:48:39 worried post this and your rating action of today will play out or pan out the landscape for

00:48:45 tomorrow for UPL. So one thing which is of, I mean, which UPL has done well is it has spread

00:48:55 out its debt maturity profile. So over the next 12 months or so, there is no long-term debt maturity.

00:49:04 And regarding the short-term debt, which is mainly for working capital, we do not see

00:49:08 a lot of stresses emerge. What we understand is that the banking relationships are still there.

00:49:13 Obviously, UPL, the presence on the ground across the world is there. It has competencies in terms

00:49:20 of its product diversification. So we do not sort of expect any stresses emerge in terms of its debt

00:49:29 repayment capacity. Akash, if you see them raise some equity or, you know, liquidate equity in

00:49:35 that sense and improve the debt equity ratio, do you think you'd go back and revisit your rating

00:49:41 on UPL in the next quarter or the next couple of quarters? Sure. So we look at debt to EBITDA.

00:49:49 So that is the key metric that we focus on. And our rating actions certainly take into account

00:49:56 past performance as well as our outlook for the next few years. So if UPL's performance,

00:50:03 it could be the next couple of quarters, it could be a year or so, we certainly

00:50:10 would take that into account and calibrate our ratings accordingly.

00:50:13 So it's past performance more than the outlook that has led to that downgrade from what I'm

00:50:21 picking up from this conversation. But hopefully it works out for UPL and you'll probably go back

00:50:25 and relook at those numbers. But for now, it's stress, a bunch of brokerage downgrades,

00:50:29 rating agencies also expressing their concern about the high leverage that UPL holds on its

00:50:35 books. But thank you, Akash, great having you today on the show. We also have with us Amar Deo

00:50:39 and Sunny Agarwal joining in for a technical and a fundamental view. Amar, five straight days of

00:50:44 gains, law of averages usually plays out, it didn't play out yesterday. But do you think today

00:50:50 could be a morning of some profit taking off the table or new highs down the corner?

00:50:54 I would say markets, the way the markets have really rallied over the last few trading sessions

00:51:02 and also what we see is that there has been a revival in the private sector banks. So ICICI

00:51:10 bank which has performed well and it has taken out some crucial zones of resistance. But still

00:51:17 1050, 1060, that's the zone of resistance. But that also is likely to be taken out. And also the

00:51:22 good part is that HDFC definitely seems to have formed a base. So now we'll have to watch out how

00:51:28 these two actually play out because they would have a significant bearing on the overall market

00:51:34 upside scenario. And if I look at the technicals and the derivatives data, so overall I've been

00:51:42 always seeing that long term, intermediate term trend for the market remains positive and strong

00:51:46 and short term, we are seeing some sort of consolidation. It's approaching very crucial

00:51:51 zone. So I would say 22,150, 22,200, that's a zone of resistance. But still it's in favour

00:51:58 of the bulls. So any pullback is a buying opportunity, support for immediate level,

00:52:04 for support for Nifty is around 22,000 odd levels. It is in the upside 22,200 is a zone of

00:52:09 immediate resistance. Also we've seen long build up happening in Nifty over the last couple of

00:52:16 days. So that also shows that there is still I would say interest, but there is some caution

00:52:22 at the same time. Absolutely. Just some details on the Zee story that has been making the round

00:52:31 since this morning and it has been reporting that renegotiations could be on. Now sources have told

00:52:37 NDTV profit exclusively that lawyers are engaging in talks right now from both sides, that's from

00:52:43 Zee and Sony. The ball is in Sony's court, whether they want to revive these merger talks or not,

00:52:50 because remember Sony had pulled the plug on the deal on the 22nd of January for a $10 billion

00:52:56 merger with Zee. The stalemate though over key issues definitely continues, even though as Zee

00:53:04 has stated publicly, Puneet Goenka is willing to step down from position of MD and CEO. But the

00:53:11 negotiations, will they move ahead or not? Why will Sony come back to the discussion table is

00:53:17 still under question. It's a key clarification because a newspaper report this morning seemed

00:53:23 to suggest that negotiations are still on and there is a specific deadline attached with that.

00:53:28 What we're learning is that perhaps there is no such strict deadline of an answer within 24 to 48

00:53:35 hours, but the stalemate on those sticking points is definitely still a big issue. We'll wait and

00:53:42 see how that stock really reacts. Amar, let me come to you on some of these, and two stocks really,

00:53:51 Zee is one of them under a cloud of what will happen next, a lot of uncertainty. I would say

00:53:56 Paytm is the other one. Any views on either of the two? And I'll go with Amar on the charts first on

00:54:02 it. Yeah, so talking about Zee, Zee overall has been actually a non-performer. If you look at the

00:54:11 stock, the stock did rally towards 300 levels and then it's going to be around 1.7880. So the stock

00:54:18 was actually, or I would say markets were anticipating that the merger would go through

00:54:21 and that would be positive, but that's not happened. And if you look at the long-term

00:54:26 charts, intermediate term trend, even the intermediate term trend, that really tells me that

00:54:31 still it's not out of the woods yet. So the levels to watch out for, because it did make a low of

00:54:38 152 on 24th of, I think 23rd of January. So now that should act as a key support zone for the

00:54:47 stock. And if we go back in time, the stock used to trade as low as that was in the COVID times,

00:54:54 even if that hit 119, 120 levels. So 150 is a level to watch out for on Zee. That's a crucial

00:55:01 zone. And for any upside move, the stock needs to sustain about 200 levels. Then we could say that

00:55:06 the stock has, there's some positive news that's building in the stock. If the stock sustains

00:55:11 about 200 levels, then it could rally higher, but the structure of the stock isn't very promising to

00:55:17 say. Absolutely. Sunny, let me get a view from you on what we're going to see as the big movers

00:55:27 this morning in the markets, considering that no major triggers coming in. Do you think that

00:55:33 metals will see some sort of shine because of what we've seen in China with a cutting of the

00:55:38 five-year loan rate? Good morning and thanks for having me on the show. Definitely I feel,

00:55:45 again, metal is a global cyclical commodity driven by the global demand and supply environment.

00:55:52 And China is one of the largest consumer of the metal at the current juncture. So definitely any

00:56:01 tailwind which would lead to the increase in demand from a Chinese economy as far as metals

00:56:06 are concerned, augurs well for a metal. But again, one has to keep in mind that any rate cut

00:56:11 translate into the demand, increase in demand environment, it takes some time, maybe six to

00:56:17 nine months, 12 months. So we may see a temporary knee jerk reaction today as far as metal stocks

00:56:24 are concerned. But from a medium to long-term perspective, anyway, what I feel is that instead

00:56:29 of metal, one should focus on mining companies. As we all know that at the current juncture,

00:56:34 India is going to auction many mining blocks, whether it is lithium or critical mineral block.

00:56:41 So that will add to the lot of kind of new revenue stream for multiple mining companies.

00:56:46 So I feel at the current juncture, from a short to medium-term perspective, mining companies look

00:56:51 relatively better bet as compared to the metal companies. Absolutely. We'll take a very short

00:56:58 break and come right back. Quick look at the implied open before we get into that break. We're

00:57:02 coming back with pre-open rates as well. Are we looking at a choppy day of trade? Possibly.

00:57:06 A range-bound trade? Possibly. We've seen that volatility also increase. What are the top picks

00:57:11 that you should see in a market like this today? We're coming right back with that and more.

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00:59:25 Welcome back. You're watching India Market Open. Implied Nifty is indicating a bit of a gap down

00:59:30 this morning, but one of the big losers in the second half of trade yesterday was Kohl India.

00:59:35 The counter went home with a cut of 5% and we've got Rupesh Sankhe, Vice President of Research at

00:59:40 Ellara Capital, now joining with more on those takeaways from the Kohn call. Morning, Rupesh.

00:59:45 Thanks for joining in. Rupesh, the street investors and analysts, including yourself, I believe,

00:59:51 were a little disappointed coming out of the Kohl India Kohn call. Take us through what were the key

00:59:57 pointers that stood out? Good morning. Definitely, the Kohl India guidance for FY24 was close to 7,

01:00:07 8 billion tons and there will be a shortfall of around 15 million tons we're expecting.

01:00:13 And for FY25 also, their target was earlier 8, 15 million tons. We are expecting close to

01:00:19 825 kind of a target for FY25. Now, if you look at the stock performance, it was largely because

01:00:27 of higher e-auction realization that witnessed in the last 12 to 15 months. And there is a lot of

01:00:33 concern is there on the e-auction realization, which has down to almost 3,200 rupees per ton.

01:00:40 Earlier, it was close to 7,000 rupees per ton. And we believe that the e-auction realization

01:00:45 will go down further because a lot of stock inventories is there. And the industry demand,

01:00:50 which was close to 240 gigawatt, has come down to 210 gigawatt. So slightly concerned there on the

01:00:57 e-auction realization front. On the volume front, we have seen the new thermal capacity expansion

01:01:03 there around 70 gigawatt by 2032. And that has boosted sentiment around Kohl India in the last

01:01:11 12 to 15 months. So to that extent, we believe that what market was factoring low single digit

01:01:18 volume growth, we're expecting close to 5 to 5.5% kind of volume growth in the next 7 to 8 years.

01:01:25 But the e-auction realization will put pressure on the margins and earning going forward. So earning

01:01:31 will come under pressure in FY25 and 26. And that investor will look at. If you look at the valuation

01:01:39 is currently at close to 4.5 times EBITDA multiple, which is quite 40%, 50% discount to

01:01:47 their historical average. But looking at the volume trajectory beyond FY30, I think the market

01:01:54 will not give them higher multiple. But definitely at this valuation, a stock is looking attractive

01:01:59 and there is a earning, we could expect around 30,000 pound kind of a profit there. But I think

01:02:07 the decent level to enter is below 400 rupees, where we will see a lot of value there in the

01:02:12 stock. Sure, sure. Rupesh, good morning. Just want to get a sense of why we saw this extent of panic,

01:02:20 because your volume guidance or output guidance was reduced by just about 10 metric tons. So from

01:02:27 780 MT to 770 MT, you're saying could be 15 metric tons. And the drop in e-auction percentages is

01:02:36 expected to be made up by volume growth. Do you think that we saw a bit of a panic reaction? Are

01:02:42 you expecting a pullback today in trade in Coal India? See, you're right. I don't think that the

01:02:49 volume cut will have a major impact. What that premium to the e-auction, which is getting around

01:02:57 170%, I think that will go down further. And that will because e-auction contribute close to 30%

01:03:04 of their earnings. That was a negative. Secondly, if you look at the volume uptake, around I think

01:03:14 next four to five years, we expect that volume will be there. But we don't expect that kind of

01:03:20 earning what they delivered in the last two years. And that is a slightly negative on the Coal India.

01:03:26 But volume front, I don't think that market will react more on the e-auction premium. And that can

01:03:32 go down further. Because if you remember four or five years back, the e-auction premium was close

01:03:37 to only 2000 rupees per ton. It has gone to 7000. It's now coming back to 3000 level. And that is

01:03:43 what a worrying factor for the market, whether they will maintain this kind of earning growth

01:03:47 or not. So that is an issue there. And other than that, I think the volume growth will be there

01:03:53 because India will witness significant growth in the power demand and renewable capacities not

01:03:59 coming in that pace. So I think coal has to be there to support the higher increased power demand

01:04:04 going ahead. So we are not worried on the coal uptake front, but I think e-auction volume will

01:04:10 come under pressure for sure. Right. Thank you for that. It was good talking to you. That's the

01:04:14 word coming in on Coal India. May have seen like a little bit of an overreaction yesterday, but

01:04:18 be interesting to see how the stock reacts today after it's digested that news overnight. Well,

01:04:24 Amari, you want to come in on the charts on Coal India and any other stocks that you're

01:04:29 recommending this morning? Yeah, first talking about Coal India. See, Coal India has witnessed

01:04:36 a spectacular rally. So if you look at the stock, so as early as September, it was almost 238,

01:04:45 currently it's around 450, 460 levels. And if you go back in time and see Coal India,

01:04:51 Coal India used to trade around 447 in December in, I would say in 2015. So it may have made a

01:04:58 higher 447 in 2015 and then it had corrected all the way down country, it's trading. So it is still

01:05:04 very strong on the long term charts. Short term, we've seen some sort of correction. So effectively

01:05:08 it means that any pullback in the stock is a buying opportunity. Support level for the stock

01:05:14 is somewhere around 400, 420. That's a very strong support zone. Talking about stocks which could be

01:05:20 of interest, one is from the pharma space and that is Cipla. So if I look at Cipla, Cipla is

01:05:26 in a different trajectory altogether. And the stock continues to remain very strong on the,

01:05:33 on various timeframes, countries from 1470 odd levels, the stock is, has rallied significantly.

01:05:40 So not at the current levels, but any pullback in the stock is a buying opportunity. And if you look

01:05:46 at crucial support zones, that's around 1370, 1400 levels. Upside, the stock would rally towards

01:05:53 1540, 1550 levels in the short term. So this is one stock one can look at. And the other is

01:06:00 from the, I would say, PSU, that is Shaping Corporation of India. This is one stock which

01:06:06 has rallied, corrected from 280 levels, currently it's around 240. So the stock has a potential to

01:06:11 rally back towards 265, 270 odd levels, with crucial support for the stock seen around 200

01:06:17 odd. So these are two stocks one can look at. Just looking at two stocks that we've been

01:06:23 discussing and what they're doing, pre-open Zee Entertainment up about over 6% and pre-open trade

01:06:29 and we just broke those details about conversations between lawyers that are going on. Paytm again at

01:06:35 5% for a second day in a row. The RBI FAQ is still being seen in a positive light, one supposes.

01:06:43 Sunny, I want to come to you on Coal India. You already spoke about Zee, but Coal India and Paytm,

01:06:49 if you have any view. So yeah, we continue to remain bullish on Coal India, although there

01:06:54 may be a short-term hiccups in terms of reduction in price due to downtrend in the option premium.

01:07:02 But what I feel is that if somebody takes a slightly longer horizon, ultimately,

01:07:06 Coal India is indirectly on a thermal power growth story of India. And valuation continues to remain

01:07:12 attractive, trading at 6% to 7% dividend yield. I think a minor downgrade in the earning and

01:07:19 to that extent we have already seen reaction yesterday. I think ultimately stock will

01:07:23 stabilize and is heading towards 500 plus level from a medium to long-term perspective.

01:07:29 And regarding Paytm, I think still the clarity needs to emerge from the company side. How will

01:07:37 this ecosystem pose a restriction on operations of Paytm payment bank? The ecosystem of and

01:07:44 cross-selling of the various financial products to its network of consumer as well as the vendor,

01:07:51 how will that emerge and what will be the growth through the sale of the various financial products.

01:07:56 So I think I would like to wait and watch as far as Paytm is concerned. Coal India,

01:08:00 I would like to add on deep in my medium to long-term portfolio.

01:08:03 Amar, MRPL, 57% gains in the last one week.

01:08:07 What is this? Uncharted territories? Is there some more room on the upside?

01:08:12 MRPL has been, I would say, rightly said, the stock, if you look at this month itself,

01:08:20 the stock is more than up by 60% and yearly it has given returns of almost 140%.

01:08:25 So if you look at the stock, the stock was consolidating and somewhere around

01:08:30 198, 200, which the stock had made around the first week of February, that was taken out.

01:08:37 And in the last four trading sessions, the stock has witnessed a significant rally. So as you

01:08:41 rightly said, it's an uncharted territory, but the good part is that the momentum there on the

01:08:46 long-term charts is very strong. I would say one of the strongest charts, which I've seen

01:08:51 in recent times. And also the volumes have been phenomenal because if you go back and see the

01:08:57 stock was consolidating in the first week of January, and then what happened was that towards

01:09:02 the 11th of January, the stock witnessed a major move that day and that also on significant volumes

01:09:07 and delivery quantity. And again, recently, last four trading sessions, we've seen increased volumes

01:09:13 and delivery quantity compared to the averages for the last 20 days. So that tells me that

01:09:17 definitely there's a lot of interest in the stock. The option remains strong. The big question is,

01:09:21 do you buy this level of infor correction? That's a tough call to make. Looking at the levels,

01:09:26 if you ask me around 230, 250, that's a zone of support where the stock, if it could correct,

01:09:32 that could be an opportunity to buy on the upside, the way the stock is rallying 300,

01:09:37 320, it doesn't go that far. Sunny, just a quick one from you on

01:09:44 fundamentally what's the word on MRPL. I mean, the stocks went on a tear. I know there have been a

01:09:49 bunch of upgrades coming in for the oil and gas sector and MRPL seems to feature on top of the

01:09:54 list for most of the topics. But what is the story here and what is your target fundamentally on MRPL?

01:10:02 I think the story in the MRPL is on expansion on GRM. So if you see off late,

01:10:10 because of this Red Sea crisis, you're seeing a spike in Singapore GRM and Indian refineries,

01:10:16 whether it is MRPL, ISC, HP, BP, they all operate on export parity price. And in case there is a

01:10:23 boost in Singapore GRM, obviously there is a boost to the earning as far as all these refining

01:10:29 businesses are concerned. And to that extent, we have seen that bump up in the quarter three numbers

01:10:34 and as per the management commentary, this advantage will continue in the quarter four also.

01:10:40 So I feel that is the reason we are seeing a bump up, I mean, a rally in the MRPL stock price.

01:10:47 Again, I feel trading at a reasonable valuation at the current juncture. But again, one has to

01:10:53 keep in mind that GRM is something which doesn't stay sacrosanct at one level. It is a cyclical,

01:10:58 it's a globally driven parameter based on the demand and supply environment. So right now,

01:11:04 I would like to take a kind of neutral view after this humongous rally, which we have seen in MRPL.

01:11:10 And I feel the better bets are oil marketing companies which offer a mix of both

01:11:14 advantage of both refining business as well as marketing business. So companies like IOC, BP

01:11:21 and HP are relatively safer risk reward bet at the current juncture. Yep, absolutely. Now,

01:11:27 pre-open rates have settled, you're looking like you're set for a flat trade. IT stocks under a bit

01:11:34 of pressure and you're seeing the Nifty IT down about half percent while not too much movement

01:11:38 on the Sensex and Nifty. Broader markets, small cap stocks seem to be doing fairly well with

01:11:45 certain specific stocks showing some action. But which are the other ones that you're going to see

01:11:50 in focus? Varsha joins us with more. Good morning, guys. So let's start with Deepak

01:11:55 Fertilizers and Petrochemicals, where it has signed 15 year LNG contract with Norway based

01:12:01 Equinor. Now, agreement is for annual supplies of up to 0.65 million tons over 15 years. Now,

01:12:08 this tie up provides for trading LNG parcels and companies growing captive needs. This LNG will be

01:12:13 delivered to West Coast of India. Next, we have Godrej Consumer, where it is divesting entire

01:12:19 stake in Godrej East Africa Holdings, Mauritius. Now, the sale of entire stake to be completed by

01:12:25 Q4 FY24 or by Q1 FY25. If you see, this contributed, the Godrej East Africa contributed

01:12:33 almost 1% to companies revenue and its net worth as on 31st March 2023 contributed almost 4.6%

01:12:40 to companies overall net worth. Then we have CIE Automotive, where it has released its Q4 earnings

01:12:46 where revenue is flat. This is led by European market slowdown and US off-highway market drop.

01:12:53 While if you see EBITDA is up 11%, margins were up 160 basis points at 14% versus 13% last year,

01:13:00 net profit was down 9% at 177 crore. All right, Varsha, you know some of those stocks in that

01:13:09 data. Very quickly, a few minutes to open. Amar, your take on Deepak Fertilizers?

01:13:16 So, looking at Deepak Fertilizers, I would say this is one stock which has been, I would say,

01:13:24 one of the non-performers and the stock has corrected significantly from almost 700 levels

01:13:30 to around 500. I would say, one should stay away from the stock right now. There could be a pullback,

01:13:36 but the pullback isn't likely to sustain because the long-term charts are not at all strong. So,

01:13:42 it could be a dead cat bounce at most. Talking about the levels to watch out for, the stock would

01:13:47 have support coming around the 450-460 zone and if there is a pullback, the stock could rally towards

01:13:53 530-550 zone. The structure of the chart really doesn't inspire much confidence.

01:14:00 So, stock up 4.5% pre-open, but Amar says it's a more structural thing, not too much confidence

01:14:08 over there. Sunny, if I were to ask you about your top trade pre-open, what would that be?

01:14:14 I would like to bet on Mahindra and Mahindra. I think a very robust set of results we have seen

01:14:20 for the December quarter. And at the same time, order book continues to remain very healthy for

01:14:27 SUV portfolio. The production is likely to ramp up from quarter four and we will further boost

01:14:32 the boost up in production in FY25. Trading at a reasonable valuation, standalone business trading

01:14:37 at 18 to 19 times price to earning multiple, I think can be added in a short to medium-term

01:14:42 portfolio with an entry target of 2200 as far as Mahindra is concerned.

01:14:46 Well, that's the view coming in on M&M from a fundamental point of view, that is the top

01:14:53 stock recommendation M&M from our guest. In the meantime, you are expecting a flat to slightly

01:14:59 lower start, more or less on expected lines. So, no surprises there. We've had five straight days

01:15:04 of gains. What you will see today is minor profit taking that could emerge, but the good news is the

01:15:09 bulls still are in control of the straight. The wicks did see a jump up yesterday, but that hasn't

01:15:14 really tended sentiment to a very large extent. Well, as expected, below 22,100, 45 points lower

01:15:22 on the Nifty. You are seeing a little bit of profit taking like you indicated and expected

01:15:27 in today's trade. The Sensex is well trading in line, flat to slightly lower 150 points off

01:15:32 on the Sensex. The Nifty down about 40 odd points. Of course, what we are seeing that the gap could

01:15:37 get bought into over the next couple of minutes and that I think will be interesting to see

01:15:40 if that actually happens. So, holding around 22,085 on the Nifty itself. A quick check on

01:15:46 how and what's contributing to the market moves and how the broader markets are performing.

01:15:50 What we have picked up in the last couple of months now is that the broader markets have seen

01:15:55 gross outperformance coming in as compared to the benchmark. Similar trend this morning as well,

01:16:00 the mid-cap index trading marginally better than the frontline names and the small cap index trades

01:16:05 the gain actually up about 0.2%. Well, across the Nifty 50 counters, like I said, the bias may still

01:16:12 be on the upside, but from the look of it, maybe not. There is more selling than gaining or buying

01:16:17 rather coming in on the street this morning. Bernstein has upgraded power grid and that leads

01:16:22 to a big bump up in trade this morning, 2.5% high is what we have got. Kotak Mahindra on senior

01:16:27 management, Regix sees a little bit of a gain, 1% higher. Pharma is not looking too bad. Oil

01:16:31 and Gas continues to feature in the top three to four stocks that are gaining. ONGC up marginally.

01:16:36 Metal seeing a little bit of buying on back of some easing, much anticipated easing coming in

01:16:41 from the Chinese Central Bank, but no runaway gains there yet for metals that we are picking

01:16:46 up on. UPL has been under pressure, continues to trade flat in early trade. On the sell side,

01:16:53 it's cold India. The disappointment continues after 5% cut yesterday. The stock continues to

01:16:58 see some pressure this morning as well. Ayesha has done about a percent. So,

01:17:02 auto is seeing profit taking after sharp run up post their earnings and brokerage upgrades that

01:17:06 we have seen. Insurance continues to see some weakness. SPI Life, HDFC Life are all trading

01:17:12 flat with slightly lower bias. I am going to find HDFC Bank to see if there is any sort of relief

01:17:17 coming in on the counter as the markets digested the clarity that came in from the management. So,

01:17:22 the communication gap finally seeing some resolution. But I believe the activity may

01:17:26 be in the small cap space, lots of counters. Sugar is welcome. Rewind spot, you want to watch out for

01:17:30 today. Absolutely. Coal India is still getting hammered despite a lot of brokerages saying that

01:17:36 the concerns in that analyst call are short term. But meanwhile, the morning is seeing a lot of

01:17:42 action from Zee and Paytm, stocks which have been notorious for a lot of news flow and uncertainty

01:17:48 in terms of fundamentals. But Zee reacting to a story that negotiations are back on. What we are

01:17:57 learning is it's the lawyers that are talking, but no clarity yet on whether Sony will agree to

01:18:03 any change at all because Zee is already offering pretty much everything that Sony wants. So,

01:18:09 will that go anywhere? It's very unclear. That's talk anyway, 6% up. Paytm seems to be at that 5%

01:18:18 circuit for a second day in a row. The RBI FAQs have given some comfort to the market that Paytm

01:18:26 will survive or perhaps has a better chance of surviving. Axis Bank has also come in to handle

01:18:31 their nodal accounts and that has given comfort and you're seeing that play out. Kodrich Consumer

01:18:35 is the other one. Now, this is an interesting play in any case when you compare it with Spears,

01:18:43 but it is divesting its arm in Africa actually, in Mauritius. It's not a very big stake sale,

01:18:50 it's about just 30 crores old, but that stock responding positively. Deepak Fertilizers is

01:18:56 the other one and we already saw a response in pre-open trade. Deepak Fertilizers, not Deepak

01:19:01 Nitride. Deepak Fertilizers is in the news because it's signed a 15-year LNG contract with Norway

01:19:09 based Equinor Agreement and which is why you're seeing that stock up about 9% a zoom up in open

01:19:16 trade. NBCC also news based this morning, they've received three work orders worth about 370 crores

01:19:23 and that's why you're seeing NBCC also having a pretty good morning. So, some spots of green in

01:19:30 the broader markets, but not too much activity as we open up for trade. Well, you've got a few names

01:19:36 that you want to see. EID Perry from the Sugar Pack is leading from the front up 6% in trade.

01:19:42 It's not just Deepak Fertilizers, but the rest of the Fertilizer Pack is also picking up on the

01:19:46 Euphoria and trading higher. Sugar stocks like Barampucini are all trading with gains anywhere

01:19:52 in the range of 2% to 4% each. So, Sugar Shortfall is what's leading to a bump up for Sugar Names.

01:19:57 EID Perry, like I said, leading from the front, seeing a big up move in today's trade. Z is

01:20:01 settling at 188. Remember, it's in an F&O band, so it's only that much the stock can move up in

01:20:05 today's trade. No matter how positive or negative the news flow remains, this morning trading with

01:20:10 a 6% rally. You've also got MMTC that's looking good. Phoenix Mills is in abidation, the Realty

01:20:16 Pack holding itself together. Blue Star, we spoke to them yesterday and they of course seem to be

01:20:22 doing quite well. They are solid earnings, reduced debt, all those factors contributing well. The

01:20:27 counter trades the gain of about a percent, just over a percent and a half. Let's put up MRPL and

01:20:31 see what it's getting up to. After a 57% up move in the last few weeks, the stock sees a big cut

01:20:38 this morning, profit taking warranted on MRPL, the counter trades, the cut of 4.5%. You've also got

01:20:45 Whirlpool that is seeing some pressure, 3% off on Whirlpool. Aegis Logistics, SJV and Coal India

01:20:51 are some of the other gainers that we are picking up on. So, that's largely where the market

01:20:55 is at this morning, a morning of some profit taking, a morning of consolidation,

01:21:00 more or less on expected lines. Amar spotted anything right now on opening?

01:21:05 Yeah, I would say if you look at some of the stocks, we are seeing some sort of movement here

01:21:13 in this OMAX, OMAX Limited. This is one stock which has from the reality space, this is one

01:21:21 stock which is, I would say witnessing a pullback and it is moving higher. So, this is one stock

01:21:27 from the reality space. It is close to a key zone of resistance, that's around 120, 125,

01:21:33 that is taking out then the stock has a potential to rally around 10 to 12%.

01:21:36 And the other stock to look at is, I would say, Minda Corporation. This is again one stock,

01:21:45 which is strong today and looking at the charts, the stock has a potential to rally towards the

01:21:52 455, 460 zone. So, these are the stocks which are looking promising on the charts as of now.

01:21:57 Amar, you want to quickly share your word with me on the three top gainers, Deepak Fertilizer,

01:22:06 Zee I know is in an F&O band, but nevertheless, if you've got a view on that and 197 Communication.

01:22:11 So, Deepak Fertilizer, we are seeing some sort of pullback happening today. The stock is up by

01:22:17 almost 10% towards 540 odd levels. So, there is a possibility that we could see some pullback

01:22:23 in the stock towards 560 odd levels, but that's going to be a zone of resistance where the stock

01:22:28 could meet with some sort of selling pressure. So, on the upside, it would be around 550,

01:22:34 560, that's a zone of resistance where the stock would meet with. And talking about Zee,

01:22:39 Zee the stock is basically, you have to remember that such stocks where there's a lot of news

01:22:43 flows, other stock moves one way or the other based on the news that comes with this positive

01:22:47 or negative. So, having said that, just like PTM on the other hand. So, Zee, I would say it's

01:22:55 more of a risky trade as of now if something works out fine, otherwise,

01:23:00 if you see the stock correcting on the upside, 200, 220, that's a zone of resistance downside,

01:23:05 150. So, it's more of a range play. Technically, if you ask me, there's not much on the charts as

01:23:09 of now for Zee. Right. Thank you. Thank you, both of you for joining us this morning on the show.

01:23:15 It's a quiet start, but much needed after the market of course, with a new intraday high in

01:23:21 yesterday's trade. Talking about the markets, the euphoria, the excitement, we believe Julius

01:23:27 Bear India has raised about 300 crores for their very first CAT III EIF. Omang Papneja, CEO at

01:23:34 Julius Bear now joins us to talk to us about what investors are thinking, what this fund is going

01:23:38 to be investing in, whether or not this is the first or the last fund raise coming to this one.

01:23:42 Omang, good morning. Thank you for joining us in the studio. Thanks.

01:23:46 Omang, I'm going to start with a very basic question for us before we talk about the broader

01:23:51 markets and the sectors and what investors are telling you. This is a CAT III EIF. Do you already

01:23:57 have an existing PMS license? Yes, we do. So, what was the rationale of launching an EIF? Was it for

01:24:02 to get foreign money into India? No, no, not at all. I'll just explain probably the background of

01:24:07 how investor preferences have changed and particularly in the HNI segment. So, let me just

01:24:13 rewind back maybe 30 to 60 years when we started Unit Trust of India, which was UTI in 1964.

01:24:22 And then the private sector mutual funds came in in the late 90s. And since then, we've got 50 lakh

01:24:28 crores in the mutual fund industry. And in 2013 is when SEBI came up with the EIF license. So,

01:24:36 in 10 years, we've got almost 9 lakh crores and almost hitting 10 lakh crores in the last 10

01:24:43 years itself. So, what we took 30 to 60 years to reach 50 lakh crores, we've reached almost 20% of

01:24:50 that in 10 years. So, clearly investor preferences in this HNI segment because EIF predominantly is

01:24:57 an HNI and institutional product, investor preferences are changing to unitized offerings

01:25:04 which are more personal in nature. So, that was the rationale. So, we had already a PMS license,

01:25:09 as you mentioned, and there was an existing good track record. And that's the logical extension

01:25:15 why we took EIF license also from a history perspective. Julius Bayer, as you know,

01:25:21 earlier was DSP Merrill Lynch, which became Julius Bayer. And we've always been an equities

01:25:26 powerhouse. Equities has been a bedrock. So, just a logical extension. Your PMS, of course,

01:25:32 is a non-discretionary PMS from what I remember. No, we have both. You have a discretionary PMS as

01:25:36 well. The key difference and from what I understand between a PMS and an EIF Cat 3

01:25:42 is one, the cost, the lock-ins. Is that the only difference between the PMS strategies that you're

01:25:49 currently running and the EIF that you've launched? I mean, what is the rationale for?

01:25:54 So, okay. So, let's compare PMS versus an EIF. So, PMS, of course, every individual has its own

01:26:02 account. So, they open a DMAT and bank account. Whereas in an EIF, you have number of units,

01:26:08 just like a mutual fund into NAV, right? So, it becomes quite smooth in terms of your tax returns,

01:26:14 in terms of reporting, because you just show your number of units and NAV. And the tax is paid by

01:26:20 the fund in the case of Cat 3, not in case of Cat 2. And what you get in hand is a post-tax

01:26:26 procedure. So, it's far more simpler to get into an EIF as compared to a PMS. So, its efficiency is?

01:26:32 Its efficiency is, yeah. And what about the minimum ticket for an EIF? I know PMS is 50 lakhs

01:26:37 regularly. So, EIF is by SEBI, one crore is the minimum. Okay. Unless if you are a registered

01:26:47 investor where you can say that you can probably put lesser. Yeah. But otherwise, it's one crore.

01:26:53 Okay. So, let's talk about this fundraising that you've done. And it's about what, 300 crores?

01:26:57 Has the fund closed now? Yes, it's almost closed. And it's entirely domestic money, just going back

01:27:04 to your old question, whether it was for foreigners, it was not. It's largely, it's 100%

01:27:10 domestic money. And how big is the size of the fund? If 300 crores is almost closed, what was

01:27:16 this? What did you set out to raise? So, it was 300 crores and we've crossed the 300 number. So,

01:27:23 I think last number which I saw yesterday was 332 or something. Okay. And this is largely existing

01:27:29 clients or new clients that have come on board? Mix of both. Okay. Okay. So, let's now talk about

01:27:34 when this fund goes out and allocates the money, right? Yeah. I do know that mutual funds usually

01:27:41 have to allocate immediately. PMS is of the option of doing a cash call or a staggered

01:27:46 investment. With an AIF and with your AIF, what is going to be the investment strategy?

01:27:52 Perfect. Fantastic question. So, I think let's go back to the comparison which we were doing

01:27:57 with AIF versus mutual funds. So, AIFs have two distinct advantages. One is you do not need to

01:28:03 put the money upfront on day one, unlike a mutual funds if you do allocate the whole thing. So, here

01:28:09 fund manager can choose to have say 50% drawdown or you know 60%, 40% whatever the case may be.

01:28:16 And secondly, also in the case of an AIF, you can part prepay as well and profit book and give it

01:28:24 back. So, in case of a mutual fund, you cannot do that. Either you fully redeem in the case of a

01:28:30 closed-ended mutual fund, when the date comes, you'll get your money back. A closed-ended mutual

01:28:36 fund cannot say book 50% profits and give you back the money. So, AIF has that flexibility. So,

01:28:41 what we are doing is we are basically taking it in three tranches and also when we return the money,

01:28:47 it's a four-year closed-ended fund, we will also take profit taking opportunities and return the

01:28:51 money and stagger it out. Right. So, this is 300 crores of commitment or 300 crores of money that's

01:28:57 already come through? Commitment out of which 50% has been drawn. So, 150 has been drawn down and

01:29:03 the rest of the 150 will be drawn down over how long? In the next three months or so. Okay,

01:29:07 and your payouts will start as soon as three years? Yes, you can pay out even earlier. So,

01:29:11 for instance, if market goes up 100% next year, we can choose to. We are more than happy to

01:29:15 distribute the income. And in terms of strategy, is it primary in secondary market? Is it only

01:29:23 secondary market? Where is allocations? So, this one is secondary market, 100%.

01:29:28 And any sort of sector specific themes that you are following? I mean, the big talking point these

01:29:33 days is EB and EI in India, right? And there is so much of euphoria around that. Is there a strategy

01:29:38 that the fund manager has adopted? Is it going to be market size focus? Is it going to be value,

01:29:43 momentum, sectors, themes? Sure. So, first on the market cap, it's a multi-cap product. So,

01:29:49 the fund manager can choose to buy large caps as well as mid and small caps. At the moment,

01:29:54 because of valuation comfort, I think it will be skewed largely towards large caps.

01:29:58 Now, on the strategy, so there are three pillars to the strategy. The first being companies which

01:30:05 have exhibited very high earnings growth. So, basically, you have companies which double

01:30:10 profits in three to four years, those will be one subset. Second is what we call fallen angels.

01:30:15 Fallen angels, something which has gone out of flavor, and you know, something is coming up,

01:30:19 say a new plant is coming up or something which will change the sales trajectory in the coming

01:30:26 months or a year. So, that is what we call fallen angels. And the third is, you know,

01:30:30 special situation trades. So, like, for example, a merger or a buyback. So, these are the three

01:30:35 things which we are focusing on and the stocks will be a subset of these three themes.

01:30:40 And any government focus themes, and you talked about buybacks, but I think the big story that's

01:30:46 been playing out over the last couple of years has been PSE. And every now and then there'll be

01:30:51 conversations around, they look expensive, the gains have been in back of orders, execution

01:30:56 could be a concern. What I want to understand from you is a whole bunch of these PSEs still

01:31:01 traded a discount from what they wore at the 2006-2012 peak. Is there going to be any exposure

01:31:07 to those stocks to those sectors that are largely government led?

01:31:10 So, we are not saying that we'll not have PSUs or have PSUs. It's basically merit wise,

01:31:17 whatever you want to buy in terms of stocks. But, you know, one thing I'll mention about PSUs is

01:31:22 that what happened over the last few years is that a lot of PSUs gave out dividends. So, when you

01:31:27 give out dividends, you know, your net worth remains flattish and your profits keep growing.

01:31:33 So, your ROEs start increasing. And suddenly, everybody in the market started seeing that

01:31:39 ROEs have inched up and PSUs have become much more efficient and hence the re-rating. So,

01:31:44 if that continues, I think PSUs will still be trading or probably also trade at a premium,

01:31:50 but that story continues, I think. And how many stocks on an average will the portfolio hold?

01:31:55 Around about 30 stocks. And how frequently will it be rebalanced?

01:31:58 Not really. I mean, it's not a buy and hold strategy. And if there was a need to rebalance,

01:32:04 would it be event based, return based, incident based?

01:32:07 Could be any. I mean, the fund manager can choose if there's something which changes the investment

01:32:13 argument completely that, of course, then the portfolio manager will rebalance or could be

01:32:19 a profit taking. It could be either. And this is a long only fund. So,

01:32:23 there's no short allocation that you are going to be making at this stage.

01:32:27 No, it's a long only fund.

01:32:28 Is there anything else about the fund that I haven't talked about? I think I've literally

01:32:31 talked about it. No, largely a multi-cap with those three things which I mentioned and

01:32:36 completely listed. Maybe also I didn't talk about, we will also invest in IPOs.

01:32:41 Exactly. So, as an anchor or in the QIB category, not the pre-IPO, it is largely just before it

01:32:49 gets listed. And also the 30 stocks that you are going to be adding to their portfolio,

01:32:54 have they already been identified, Umar? So, as we speak, it's getting deployed. Yes,

01:32:58 it's a large part of it is identified. And is it a cap at 30 or we could?

01:33:02 No, it could be 28 to 30. If you see something good, you could still add,

01:33:05 you could still go out and add. It doesn't have to be one in one out.

01:33:07 No, no, no. Okay. Also, in terms of incremental capital,

01:33:10 so if this fund is close at whatever 300, 350 crores with the commitment of that sort of money,

01:33:17 would you be, I'm sure you've talked to a lot of investors and you've probably had a lot of

01:33:21 positive feedback and hence the commitments, would you be looking to raise a second AIF-CAT III fund?

01:33:26 Yes. So the way we are looking at our AIF business is that we're trying to

01:33:30 give investment solutions to HNIs, right? So it's not that we're wanting to build an

01:33:35 investment management business. So many things which probably are not available for HNIs,

01:33:40 generally through other manufacturers, that is what we'll create. So for example,

01:33:45 if you want to play a credit strategy, you might want to play through a fund to fund and diversify

01:33:50 instead of one fund buying only 10 or 12 papers, you might buy five funds and hence you have

01:33:56 exposure to 60 papers, right? So you're diversifying in terms of this. So those

01:34:00 kind of solutions we'll provide and as time... This is going to be a separate AIF that you

01:34:04 would be looking to launch with it. I'm just giving an example. I'm not saying that we're

01:34:07 launching it. It's more solution-driven as opposed to... Yeah, this will be a solution-driven business

01:34:11 pertaining to our HNI clients. Also, while you mentioned this is more solution-driven,

01:34:18 I mean, it's imperative for our viewers to understand, I know this is for an ultra HNI

01:34:22 segment, but what is the cost? You talked about the lock-in being three years. What is the cost?

01:34:27 What is the carry? So this fund does not have a carry. It's a fixed fee. No profit sharing. No

01:34:34 profit share. It's the most expensive share class is one and a half percent, which keeps going down.

01:34:40 Okay, lovely. So it's not too much more than a PMS in that sense. It's significantly lower.

01:34:44 Yeah, because I think most PMSs, if on the direct code range, anywhere in the range of one to two

01:34:48 percent, this is 1.5. Yeah, I think, yeah, maybe. I mean, not going into specifics, but generally,

01:34:54 the market is around 2% or so. So this is 1.5. Oh, that's actually pretty good. And then there

01:35:00 is a three-year lock-in. If there is an exit... No, there's no lock-in. It's a closed-ended fund,

01:35:04 but the investor has an option to exit. Has the option of liquidating. Yeah.

01:35:08 How long into the fund? After one year. Oh, lovely. Okay. So there is a three-year

01:35:13 closed-ended fund, but there is that option of exiting at the end of one year, like Omang

01:35:17 indicated. Omang, we'll move away from the fund and talk about the view on the markets, because

01:35:21 we should have some focus on that too. Where do you stand on the markets right now? We've all

01:35:27 had the big sort of the big event lined up in a few months from now is the election, but the

01:35:32 outcome seems almost a given. Earnings is behind us, which was largely in line, if not better for

01:35:38 most sectors in terms of expectations. The run-up has been sharp. The rate cuts from the US are not

01:35:43 coming anytime soon. I feel like the markets will very soon start missing triggers. Every time you

01:35:48 see there's a price or time correction, they outdo us and move up. From where we stand right now,

01:35:54 what is the advice to your clients? Allocate upfront, stay on the sidelines, sell on rally,

01:36:01 buy on dips? How do you feel? So if you look at history, I think any election year,

01:36:07 most of what's going to happen is priced in six months, in the first preceding six months of the

01:36:14 election. I don't think this year also it's going to be different. So as you said, it's already a

01:36:20 given outcome. So it's not going to happen. I mean, generally markets can be very different,

01:36:25 but it's not going to happen that people are going to wait for the outcome and then start buying.

01:36:29 I think you will see a large part of it getting discounted before the outcome itself. Now coming

01:36:36 to, I mean, that is probably nobody can predict the short term, but maybe if I'm giving it a try,

01:36:42 but largely on the longer term, I think the story is intact. And when you look at election to

01:36:48 election in the past few elections, which India has happened, always the returns been around 12

01:36:54 to 15% CAGR. And I think it's not going to be very different long term. And when you're seeing this

01:37:01 kind of momentum from a GDP growth and reaching a particular scale in global standards, I think

01:37:09 it's a great story to be there. Yeah, it is a great story. We'll take a quick break. We'll

01:37:13 come back. We will continue our conversation with Omang. So stay with us on the other side.

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01:39:47 Welcome back. You're watching India Market Open. Well, the markets are having a flat or slightly

01:39:52 down day. The breadth of the market also biased towards a downside in today's day of trade,

01:39:57 holding on just around 22,100 on the index. And your biggest gainer is Deepak Fertilizer,

01:40:03 One9 is in communication and Zee Entertainment. Well, my colleague Tamanna caught up with Deepak

01:40:09 Nitrate's Malik Mehta and began by asking him about the specialty chemical space in a roundup of what

01:40:14 third quarter look like for the company. This is a slice of that conversation.

01:40:19 I do agree that quarter three has not been a quarter of remarkable numbers for Deepak Nitrate,

01:40:28 standalone or consolidated. But I also believe that we have shown a significant ability,

01:40:38 remarkable ability in that sense to remain extremely relevant in the Indian chemical industry

01:40:44 and its ability to supply to the world. Now, when we're talking about margins, yes, margins have been

01:40:50 affected partially. That is because of volatility in the feedstock prices, partially because in the

01:41:00 Ag Chem segment, a lot of customers that we have and their books being closed for December 31st

01:41:08 and they had an unusually difficult CY23. Now, moving ahead, once one looks at the pain that the chemical

01:41:19 industry has been going through, I think part of this pain is to be seen in terms of the kind of challenges

01:41:28 that it has gone through over the last year, year and a half. That challenge is in most cases,

01:41:35 ones which have not been expected. So whether it is the Red Sea crisis, whether it is the Ukraine war,

01:41:44 whether it is these geopolitical tensions that have led to a de-linking. Now, the chemical industry

01:41:53 worldwide thrives when there is a stability because customers and suppliers can plan long,

01:41:59 have order books accordingly, and they become a little bit skittish when there is global geopolitical

01:42:06 uncertainty. And because of that, there is always a quarter catch up in terms of resetting what they

01:42:13 consider as the new normal. Looking forward, what we can see from our own markets as well as the supply

01:42:24 chain that we are intrinsically linked to, we expect the demand resurgence to start from Indian consumption

01:42:33 improvements. And we are also seeing a general worldwide improvement in terms of customers' confidence

01:42:43 in its buying strategy over orders. In the beginning, this means that there is an improvement in volumes.

01:42:52 And over a period of time, this means that there is an improvement in margins as customers and suppliers

01:42:59 are willing to settle down into a predictable planning strategy. Now, Deepak is broad in its sense of

01:43:08 being able to supply to Ag Chem, Pharma, Materials, Construction, Paper, Detergents, etc.,

01:43:14 dyes and pigments. And hence, we are de-risked in that sense. We don't have an over-dependence on one

01:43:20 segment or another. At the same time, we do have 30% or dependence on Ag Chem in the stand-alone business.

01:43:31 And here, we are seeing that there is an improvement, as I mentioned earlier, in volumes. And moving

01:43:37 forward, we are certainly seeing an increase in wallet share. So over the last 6-8 months, what we have

01:43:43 been doing concurrently is also brownfield capexes. And where brownfield is not good enough, greenfield

01:43:50 capexes to be able to maintain or increase wallet shares. Right now, we have done it by increasing

01:43:57 our headroom with existing plants. But over the next 12 months, there is a lot of semi-greenfield

01:44:03 or significant brownfield expansion that is due to be commissioned. We remain bullish.

01:44:10 Alright. So you remain bullish. Deepak Nitrate is looking at recovery mode. You are saying it will start from India.

01:44:19 So let me begin with what kind of timelines you have in mind or you are predicting. Because if this is

01:44:25 determined on geopolitical factors settling down, that is something that has very little predictability

01:44:33 one way or the other. So I want to understand the optimism when you say that recovery will come.

01:44:40 And when do you think it begins? So geopolitical uncertainty by its nature, I don't expect geopolitics to settle down.

01:44:47 Yeah. This is a year when 90% of the world's democracies go to vote. I don't expect any sort of normal this year.

01:44:54 Yeah. It's never happened in history and I don't know when it will ever happen next. But it's not the settling down.

01:45:02 The settling down that I expect is in terms of the volatility. Right. Now, for example, take the Ukraine and Russia war.

01:45:11 There was a significant peak that took place with regards to natural gas availability as well as prices.

01:45:18 But the war is not resolved today. In fact, it continues grindingly. Gas prices, on the other hand,

01:45:25 have been able to find floor after floor over the last three or four months in wintertime.

01:45:32 And so it is not about geopolitics settling down, but it is about the volatility coming down.

01:45:39 OK. So once that happens, all parties resume a sense of confidence in their buying and selling strategies.

01:45:47 Also, it is pertinent to note that right now we're continuing to live in an environment which has relatively

01:45:54 high inflation trending downwards, but an interest rate which has not yet followed suit.

01:46:00 A lot of players worldwide are hoping for that to happen imminently, whether that happens in March or April or May.

01:46:08 Some of them have planned aggressive expenditures only following this rate announcement.

01:46:16 So there is optimism. There are animal spirits led by India in that sense.

01:46:22 But a lot of companies worldwide feel, at least right now, that there is no harm in waiting for a month or two

01:46:29 before making any significant announcements or rejigging any significant parts of their supply chain.

01:46:35 In all of these factors that you mentioned, Mr. Mehta, I'm trying to understand how much of a pain point is the China factor.

01:46:45 We've seen a lot of recovery in their exports and some may describe it as dumping of chemicals from China.

01:46:54 We've seen that impact chemical companies across the board.

01:46:59 I just want to understand that context for Deepak Nitride.

01:47:03 Sure. So China, as a manufacturer of NODE, should never be ignored.

01:47:09 Pretending like India is in a sense insulated or that it is de-linked or any region in that world for that matter.

01:47:18 That is, I think it is, I hope right now, and it is not a mature way to think about it,

01:47:25 even though a lot of Indian companies do offer that as a solace.

01:47:30 The chemical industry in China is plagued by a slightly different situation, in my opinion.

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01:50:20 Hello and welcome to NDTV Profit.

01:50:22 You are watching a special where I am in conversation with Sanjay Kumar Jain,

01:50:27 Chairman, Cum Managing Director at IRCTC.

01:50:30 Sir, thank you so very much for taking time out for us post your earnings release.

01:50:35 Thank you, Pallavi.

01:50:39 So, sir, to begin with, I am actually curious to understand what is the strategy,

01:50:44 what do you intend to do now that you finally incorporated a payment aggregator business?

01:50:50 So, it is already incorporated and discussion is underway, will come soon.

01:51:02 Okay, okay, alright.

01:51:05 Sir, so the catering business revenue growth was strong this quarter

01:51:10 and one of the reasons for that was because of the significant addition of trains,

01:51:15 41 trains in Q3 which took the total to 1518.

01:51:20 So, was this growth also driven by seasonal demand

01:51:24 and how are you rating or looking at the performance of this vertical?

01:51:29 Yeah, catering segment, both our catering segment and tourism segment,

01:51:37 this quarter has given a wonderful result.

01:51:41 Basically, there are two reasons for catering business to grow.

01:51:44 First, the festive season this year fell in Q3 as compared to Q2 last year

01:51:51 and the other, as you correctly told, the addition of Vande Bharat and other trains in railway system.

01:52:02 Okay, okay and do you see demand continuing to remain strong

01:52:07 given that we are heading into peak travel season, the summer season?

01:52:11 Yeah, you see, there is a huge growth in the railway sector in particular and economy in general.

01:52:25 So, any addition of trains gives us all the four business which IRCTC is into.

01:52:34 First is ticketing, another is catering, third one is rail near and the fourth one is your tourism.

01:52:40 So, addition of a train has a multiplier effect on the business of IRCTC.

01:52:47 Absolutely, alright. So, in the mobile catering segment,

01:52:51 what is the status of the move to longer tenders for trains that you are currently tied up with?

01:52:57 I understand that all trains are meant to move to the 5+2 years in a phased manner.

01:53:03 What are the benefits associated with longer term tenders?

01:53:07 So, there are two things. First thing is we have railway board,

01:53:15 Ministry of Railway has recently come out with a new catering policy in which they have permitted

01:53:22 clustering of trains and investment into base kitchen by the vendors not only in railway premises

01:53:30 but outside railway premises which will give two kinds of benefit.

01:53:35 First, they have a assured business from IRCTC or railway and additionally they can also

01:53:42 work in the private sector. So, these are the two major changes what I am seeing here.

01:53:49 This will bring investment for improvement of the quality and at the same time the tenders are being done for 7 years.

01:53:58 So, longer period will help them in investing money and bringing quality and perceptible changes

01:54:05 in what we see in the catering business today. So, and this ultimately will lead to a win-win-win situation for all.

01:54:16 First for our customer, another is for the vendor who is there and last but not the least the IRCTC.

01:54:23 Okay, alright. So, would you also be able to give us an update on the non-rail catering business?

01:54:30 What are the plans for expanding that particular segment and what is the potential for revenue contribution going forward?

01:54:38 You see, it would not be good on my part to just specify some revenue but I can tell you that we are already on.

01:54:52 Nine such ventures are already in operation and many more are coming. We are under discussion with them.

01:55:01 So, anything if you put on zero will be infinite growth. So, when NRC was very low or almost zero,

01:55:11 so whatever we are doing will have a very-very high reward ratio.

01:55:17 Okay, alright. The tourism segment saw the biggest revenue growth. It now accounts for about 17.5 odd percent of revenue.

01:55:26 What are the drivers of growth going forward? Do you anticipate that the share in the revenue mix will rise further going forward?

01:55:39 First thing, the tourism sector growth, with the policy change by Railway Board and bringing this Bharat Gaurav train

01:55:51 into this for IRCTC for improving rail-based tourism, this is one such policy which is creating a huge business for IRCTC tourism.

01:56:04 Like we have already tied up with, entered into an MOU with Uttarakhand government for improving rail-based tourism,

01:56:13 for bringing rail-based tourism to Uttarakhand. Similar requests are there with us from different other states

01:56:20 and quite a few we are sure that we will be able to take in this quarter.

01:56:28 It's not fair on my part till it is finalized to talk and tell anything, but this is under discussion.

01:56:37 Second thing, tourism as a segment, your second question was the segment like how much percentage will be there in the overall mix, this thing.

01:56:49 As you see this kind of growth, this type of mix, like when we were adding catering, tourism,

01:56:59 these two sectors will be growing, growing, growing. I am telling you because of two reasons.

01:57:05 First, economy is already booming. There is a lot many capex in the railway segment where they are putting investment to

01:57:18 the rolling stock, to the infrastructure and releasing of capacity in the railways because of this DFC coming in.

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