Ask Profit | RBI Policy Decision | NDTV Profit
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00:00 In fact, like I said, most sectors in the green.
00:03 We are joined by Lancelot Dikuna this morning and we will also soon be joined by Rajat Bose.
00:09 Lancelot, good morning.
00:10 What can you tell us about what you are making of the equity markets right now?
00:14 Sharpe bounced back from the low point of the week and it means that the domestic investor
00:19 is buying, is deploying at strategic levels.
00:22 Yes, I think there is definitely a demand for equities even at these levels because
00:30 with the status quo continuing in the government, we are expecting that policies will continue
00:35 to be similar and all these policies are likely to drive growth higher.
00:41 Similarly, we saw that even the forecast from the RBI was 7.525 and that is something which
00:50 is good for the markets because if you've got a good growth, then corporates will also
00:53 benefit from that growth.
00:55 And in turn, economy growing means a lot more opportunity for companies to make higher profits
01:01 and increase their market penetration.
01:04 So all in all, I think the outlook has now settled.
01:07 The event is over and now we are seeing some kind of consolidation and there will be sectors
01:14 where and companies where valuations have become reasonably attractive and that's where
01:20 I think you will start seeing the movement of funds into those sectors and those companies.
01:24 Very quickly then, which are those stocks and sectors that you are seeing that currently
01:28 have value, Lancelot, and then we will jump straight into the queries.
01:32 So I would look at, for example, the IT segment.
01:36 If you look at most IT companies, they have been flat for a better half of 12 months to
01:41 24 months and there has been, while the quarterly results were a bit muted and the outlook was
01:50 a little bit difficult for the first next quarter, but the longer term outlook, the
01:57 second half of the current year would be much better for the IT companies.
02:00 And you are beginning to see some order wins driving growth and that will translate into
02:07 higher demand for companies in a similar space.
02:12 Similarly, I think the banking, the private sector banking, private sector, NBFCs was
02:18 an area, even life insurance companies was an area where the last 12 months or even last
02:24 two years has been pretty tough for the space.
02:27 And some of them were driven by their individual companies' issues, like you had Kotak Mahindra
02:33 Bank having an issue with its own, you had HDFC Bank and the merger.
02:38 So there is still value in those kind of franchises.
02:41 They have been producing good results, they're growing.
02:46 And with improvement expected in rural India, I think a lot of these will stand to benefit
02:52 on the upside as well.
02:55 So these are some of the companies that can be looked at being accumulated during the
02:59 post-volatile period.
03:03 Let's jump into the queries.
03:04 I'm told that we're also joined by Rajat Post.
03:07 Rajat, thanks so much for taking the time and good morning to you.
03:09 I'm going to start with the first question.
03:11 Good morning.
03:12 Sravya is asking the first question.
03:14 She's joining in from Vijayawada and she's asking about BHEL.
03:19 Would you suggest that she can buy BHEL at this juncture?
03:23 And she's also saying that she's holding IRFC.
03:26 So she's wondering whether to hold on to that stock right now.
03:30 Rajat.
03:31 I would say that BHEL actually on the day when there was a big fall, it went down with
03:40 a lot of high volume.
03:43 And this time on a recovery trail, it could not really clear its 20-day exponential moving
03:49 average.
03:50 And now it is below even its nine-day exponential moving average.
03:54 So I wouldn't definitely suggest that she can buy BHEL right now.
04:00 And regarding IRFC, similarly, I would say-- see, Alex, one thing I would like to mention
04:07 here is that technically this market is still very overstretched.
04:13 And the negative divergence on the 14 RSI on the weekly chart is still there.
04:18 So there would be a correction.
04:20 There would be a retest of the 200-day exponential moving average.
04:24 So here, I wouldn't say that most of the stocks you will find that they are either you book
04:31 profits or you may hold on.
04:33 If you are a long-term investor, you can continue to hold on.
04:37 But anybody looking at short term, this is not the time to buy.
04:40 OK.
04:41 All right.
04:42 And we'll get several of the individual stocks also addressed.
04:46 But the next question we're taking is from Raj Kumar.
04:49 Raj Kumar is asking about Borosil Renewables, which he's holding at levels of 564.
04:56 He's tuning in from Bengaluru.
04:57 He's asking whether to hold on to this.
04:59 Lancelot, what's your view on the fundamentals for this stock?
05:02 I think fundamentals remain good.
05:05 But the stock had a stellar run up in the last year or so and now seems to have made
05:12 some kind of a correction.
05:13 It is improving.
05:15 But if one looks at the business potential, the business is good because you are seeing
05:21 a movement into the solar space.
05:23 The government is also encouraging significant investment by individuals into the solar space.
05:30 And long-term outlook is good.
05:32 But however, when you're paying a high price, then obviously if earnings do not grow, then
05:38 maybe some swift disappointments in terms of the price.
05:43 So one has to be a little careful rather than investing at higher levels.
05:48 Wait for maybe a correction and the correction would be a good time to enter this company.
05:52 The next stock that we're taking is Vari Renewables.
05:56 And this is a question coming in from Amjad.
05:59 Amjad is asking whether he should hold on.
06:02 I'm just trying to pull up where the stock is currently trading.
06:07 And in fact, it is at 2,192 or thereabouts.
06:10 He says that he's bought at higher levels.
06:12 Any view on the charts, Srajit, what should he do if he's bought at much higher levels
06:16 than it currently trades at?
06:18 What is the stock?
06:19 We're talking about Vari Renewables.
06:22 Vari?
06:23 Yeah, that's right.
06:27 It's currently at a lower circuit.
06:30 Vari Holdings.
06:33 I am sorry, I can't find the stock.
06:36 Okay.
06:37 Lancerot, are you familiar with Vari Renewables?
06:39 It's currently at a lower circuit.
06:41 It's trading at 2,192.
06:44 So I have no coverage on this stock as well.
06:48 So maybe we can circle back and see if we can get Rajat to look at the chart later.
06:54 But in the meanwhile, let's talk about Candra Bank then from the banking space.
06:58 Jai Krishnan from Coricode is asking about whether or not it can be bought at the current
07:02 level.
07:03 Lancerot, what's the view on the fundamentals of this one?
07:07 So I think, yes, Candra Bank is looking good.
07:11 We have seen good results coming this year.
07:14 And given that the bank is now in the module complete and you are seeing some synergies
07:21 in terms of the cost reduction, and I think with the improvement in net interest margins,
07:29 the outlook for the next 12 months would be good and you would see better results coming
07:33 from Candra Bank and that would drive valuations or share prices higher as well.
07:39 So one can look at accumulating the stock even at the current levels.
07:44 The next one is from Pawan.
07:45 Pawan is writing in from New Delhi and asking about rights, which has been bought at levels
07:50 of 550.
07:51 Rajat, the view on rights, would you hold or sell this?
07:57 It's currently trading at 646 and so therefore Pawan is making a bit of a profit.
08:02 See, around 600, 601, I think the 200 exponential moving average is located.
08:11 It is exactly 598.95.
08:14 That is a little below the 600 level.
08:19 This should be used as a stop loss and one can continue to hold.
08:23 But if one is holding, if one is already in some profits, part profits may be booked because
08:32 I don't think it will go much further up from here.
08:36 But still I would say that use a stop loss.
08:39 Maybe a stretch stop loss would be 598.
08:41 Otherwise, the stop loss should be below 625.
08:46 Okay.
08:47 RCF is the next counter that we're talking about, Rashtriya Chemical Fertilizers.
08:51 And it's currently trading at 153, up about 2% in trade.
08:57 And we've got Prasad who's bought at levels of 161.
09:00 He hasn't specified a time frame.
09:02 So Lancelot, I'm coming to you on this one.
09:05 Fertilizer stocks in general haven't had the best time of it over the last year or so.
09:09 But would you hold on to this?
09:11 No, I think if you're in profit, one should look at booking profits because fertilizers
09:16 are extremely cyclical.
09:18 Also a lot of the pricing gets impacted based on government policy in terms of assisting
09:25 farmers, etc.
09:27 So you do see that there are periods when they announce good results, but then there
09:33 are cycles when you will find the company struggling.
09:36 So in cyclical companies, it's always better to exit when the results are good because
09:42 that's the time when the valuations are at their peaks or even highest.
09:46 So one should really look at booking profits and moving on.
09:50 If you are very close to the price, but you are in a bit of a loss, would you still say
09:53 you should book, Lancelot?
09:56 I would say then one can wait for the monsoon because the period after the monsoon is when
10:01 you would see improved results.
10:04 And say September results when they are announced, you would get a better sense of how the company
10:11 has performed.
10:12 And given that the outlook for monsoons at the moment is positive, one can afford to
10:17 take that call and wait for the next three months and then decide.
10:22 We have to slip in a very quick break, but on the other side, we'll talk about a development
10:27 from today's RBI monetary policy where there is a change in the definition of bulk deposits
10:32 and this will affect a set of deposits.
10:36 Lancelot as well as Raja, thanks so much for joining in and we will take this forward the
10:40 next time we meet.
10:41 Do stay tuned, viewers.
10:42 We'll be back on the other side to talk about bulk deposits.
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13:44 Welcome back.
13:48 You are watching NDTV Profit and it is time to address a significant change that was announced
13:53 in the RBI monetary policy.
13:56 Outside of monetary policy, it has to do with the definition of bulk deposits.
14:00 The limit of bulk deposits has been hiked to 3 crore from 2 crore and it is a significant
14:06 development.
14:07 So, let us talk about what this means not just for depositors but also for banks.
14:12 I am joined now by Subrat Kumar who is Executive Director at Bank of India as well as Mohit
14:16 Gang, the Co-Founder and Chief Executive Officer of Moneyfront.
14:19 Subrat, thanks so much for joining in and just help us understand what the size of bulk
14:25 deposits or the quantum of bulk deposits currently stands at.
14:30 Is this a very popular product?
14:31 Good morning to you and all the members on the panel.
14:36 The thing is that yes, today it has been announced by the RBI that the threshold for the bulk
14:42 deposits has been increased to 3 crore.
14:44 So practically speaking, we are Bank of India per se is one of the, you know, kind of having
14:50 very lower level kind of bulk deposit compared to industry peers and this 3 crore thing is
14:57 that, which is like bulk deposit falling between 2 to 3 crore is very insignificant amount
15:02 I would say.
15:03 So, impact on the overall which is roughly around 13.5% is there in case of Bank of India
15:10 bulk deposit at percentage of aggregate deposits.
15:13 So that may not impact, means like impact will be very less for us and as it is bulk
15:18 deposit as a product for a bank is a, you know, is a product to manage the liability
15:25 franchise on the bank side and depending on the market condition which includes liquidity
15:29 position and the liquidity position of the bank as well as in the system, bank resorts
15:34 to bulk deposit.
15:35 So, there are other options also, bank weighs the pros and cons before tapping this particular
15:40 window.
15:41 So, like the other product is certificate of deposit also there, Interbank in Interbank
15:45 market.
15:46 So, that also we can tap.
15:47 So, it is a product which is available to the bank.
15:51 It is not like a retail deposit which is there with the customer.
15:54 So, that is the basic difference.
15:56 So, this is what I could say at this point in time.
15:58 I am just trying to understand a couple of things.
16:00 What is the profile of depositors that choose bulk deposits?
16:05 That is one and two, what is the tenor usually?
16:09 What is the average tenor of these bulk deposits?
16:12 So, the profile is like that mostly it is the…
16:15 Sorry, I think I have lost your audio.
16:17 Yeah, am I audible?
16:19 Can you hear me?
16:20 Yeah, I can hear you.
16:21 Am I audible?
16:22 Okay, I think I am unable to hear.
16:25 So, can you please repeat what you are saying?
16:29 Yeah, am I audible now?
16:32 Am I audible now?
16:34 Yeah.
16:35 So, my point is that this bulk deposit basically the most of the means like depositors are
16:42 private entities and government institutions mostly, right?
16:46 And average profile it varies from bank to bank because it is up to the bank asset liability
16:52 management section.
16:53 They decide to tap the bulk deposit and the tenor will be decided by them only.
16:59 It is at the bank's discretion.
17:01 Suppose based on the liquidity position, the structural liquidity position and all, right?
17:05 So, average tenor you cannot say maybe today I need a deposit for three months segment.
17:10 So, I will only tap the three month segment and in case I need for one year or six months.
17:15 So, based on this liquidity structure of that particular bank, the maturity is decided,
17:19 tenor is decided.
17:21 Okay, and sorry I could not hear that last bit.
17:24 So, what is the kind of profile of depositor?
17:28 I told you that mostly they are either corporate entity or government institution.
17:33 Understood.
17:34 Okay, okay.
17:35 So, very few.
17:36 So, from that perspective not too much of an impact.
17:38 Would it be right to assume then that broadly you would see a reduction in the cost of deposits
17:45 for the bank?
17:46 So, that is what I said in the beginning.
17:49 See, it is we have to maintain means like normally banks maintain a trade-off which
17:53 is the least expensive source of funding in case there is liquidity issue or there is
17:57 some liquidity tightening in the situation which is the least expensive sourcing proposition.
18:03 So, if bulk deposit some banks may give better rate means like if they want to take and if
18:08 bank is not very much interested in bulk deposit then they may quote the rate which is at par
18:13 with the certificate deposit rates means like prevailing in the market.
18:17 So, that is why it is not a rate, a specific rate which every bank quotes.
18:22 So, it depends on the liquidity profile of that particular bank.
18:25 Okay, fair point.
18:27 It is also been communicated to me that there are high net worth individuals and ultra high
18:34 net worth individuals that park money in bulk deposit.
18:38 So, to that end Mohit, I am just curious what these individuals would do.
18:42 We were speaking earlier and you were pointing out that these individuals are unlikely to
18:46 shift just because of the convenience of it.
18:49 Look, I think yeah bulk deposit do offer a strong bit of convenience if you are parking
18:55 money and if you are very uncertain about the tenor of your money.
18:58 I think people typically tend to just park it with the bank in form of bulk deposits.
19:03 My sense is raising the limit from 2 to 3 might not deter that kind of profile who is doing it.
19:09 But as rightly pointed out, I think it is mostly corporate treasuries, trusts who are
19:13 doing these kind of instruments.
19:14 Ultra HNI, yes, they do to some extent but I don't think so.
19:19 It is a fairly large market but yes, whoever is doing, I don't think so will get deterred
19:23 by this hike in the minimum amount from 2 to 3.
19:27 Perhaps he is better off because whatever he was parking and fetching rate on, he can
19:32 park some additional funds and fetch rate on that also.
19:35 And assuming that there are individuals that are choosing to currently make bulk deposits,
19:41 would you say that it is more efficient to shift to other instruments, if so, which instruments?
19:46 Look Alex, it is always been more efficient to shift to other kind of debt instruments.
19:51 However, the fixed deposit market we have seen has been fairly sticky and for various
19:57 reasons of safety and comfort.
20:00 But if you were to shift, let's say an arbitrage fund is a great option.
20:04 It is a tax-efficient mode of parking your funds very, very safely.
20:09 And the current going rates are 7.5 to 8 with equity taxation that makes it highly, highly efficient.
20:16 The other option could be corporate deposits but those are not really available below 1
20:21 year tenure.
20:22 They are only available from 1 year and upwards.
20:23 So, if someone is willing to park a bulk deposit for about a 1 year tenure, which again is
20:27 a very small size of market, then perhaps corporate deposits could also be a better
20:32 alternative.
20:33 But I really doubt how many of treasuries or trusts or larger institutions would actually
20:37 go for arbitrage funds because as a corporate mandate, they are typically barred from parking
20:42 into any form of equity instruments.
20:44 But yes, to answer you, arbitrage, number one, corporate deposits, number two, if the
20:48 tenure is above 1 year and number three, perhaps liquid funds or money market funds are also
20:52 great alternatives.
20:53 They give you a lot of convenience of withdrawal and fetch you almost rates which are identical
20:58 to public deposits, in fact, a little higher than those.
21:02 Fair point.
21:03 So, Subrath, coming back to you and thank you for explaining this so clearly, would
21:09 it be right to assume that perhaps the composition to a certain extent and the exposure to bulk
21:17 deposits over a period of time could reduce and you, banks could prefer certificates of
21:22 deposit instead?
21:23 So, see, I can tell you one thing, it is absolutely at the discretion of treasury because treasury
21:30 always weighs the, I told you, pros and cons, which product will be suitable to manage the
21:34 liquidity, best suited at that particular point in time.
21:37 So, it is basically a treasury product and they decide, it is not like a retail product,
21:43 it is different.
21:44 So, if certificate of deposit is offering a competitive or better rate, bank will resort
21:49 to CD to manage the liquidity.
21:51 It is not necessary to always participate in kind of bulk deposit kind of bidding.
21:56 So, the final word is that there is not going to be a dramatic impact of this move?
22:01 See, move is that, see, for it, again, it depends on the bank, for bank of our side
22:08 and our side of bulk deposit, our deposit falling between 2 to 3 crore is very insignificant.
22:13 So, it is not going to impact much.
22:15 That's what I would say.
22:16 Okay, fair point.
22:17 Thank you so much, gentlemen, Subrath as well as Mohit for joining us and for explaining
22:21 this to us and our viewers.
22:22 Pleasure having you on the show.
22:23 Thank you for having me.
22:24 Thank you.
22:25 Alright, viewers, so there you have it.
22:27 That's the latest development.
22:29 We will have to speak to a few more entities to see what the impact is.
22:33 But the sense is that for the large banks at least, this is unlikely to have a material
22:39 impact.
22:40 And as was pointed out by the Executive Director of Bank of India, a lot of institutions, trusts,
22:46 as well as certain other entities tend to park money in bulk deposits.
22:50 It is not so much the individuals that are parking money.
22:53 And so, to that extent, the impact on the depositor will also be limited.
22:58 But that brings us to the end of this particular edition of Ask Profit.
23:01 Thank you so much for joining in.
23:03 And it's been an absolute pleasure bringing it to you.
23:05 Do stay tuned.
23:06 Lots more coming up over the course of the day.
23:08 And this is NDTV Profit.
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25:57 Well, good afternoon. Welcome. You're watching NDTV Profit. I'm Harsh Saita.
26:02 Let's take a quick look at where markets are at.
26:05 And you're looking at the Nifty really doing well.
26:09 We're going from strength to strength, 1.6% higher on the Nifty 50 benchmark itself.
26:14 So very strong cues coming through.
26:17 You know, let's pull up the top gainers, losers, all the contributors, one of the two.
26:23 And what we're seeing largely is traction coming in from IT.
26:27 Infi, Reliance, even an HDFC bank starting to contribute, and ICICI Bank as well among the top five contributors.
26:34 But IT really is stealing, you know, all of the limelight, at least in trade today.
26:40 If we can pull up the Nifty IT index and see how that one is performing,
26:44 you'll largely see that it's going from strength to strength as well, 3.4% higher on the Nifty IT index.
26:52 The Nifty Bank as well, not doing too bad. Let's pull up the Nifty Bank index as well.
26:57 Not doing too bad. And you can see live visuals coming straight to you
27:01 with regard to the press conference of the RBI or post the RBI MPC.
27:06 And we'll cut across to that as soon as it starts.
27:09 But sticking with markets, you're seeing a 1% uptick even on the Nifty Bank as well.
27:14 The Nifty Auto also doing fairly well, 1% plus higher.
27:18 But we did mention the Nifty IT is the top sectoral gainer, though, 3.4% higher.
27:23 Pharma Metals also doing very well, 1.3%, 1.2% higher as we speak.
27:29 The Nifty Realty also up 1.6% odd.
27:33 So across the board, we're seeing good green, the breadth of the market extremely strong.
27:37 And we're seeing that within the Nifty 50 pack, we have almost 45 positive contributories to the Nifty.
27:46 But let's quickly go across and listen in to the Governor from the press conference.
27:50 So hello and good afternoon. Welcome to the post policy press conference.
28:01 Today we have with us Governor Reserve Bank of India, Sri Shaktikanta Das,
28:06 Deputy Governors Dr. M.D. Patra, Sri M. Rajeshwar Rao, Sri T. Ravi Shankar and Sri Swaminathan Jai.
28:15 We also have with us Executive Directors Dr. O.P. Mall and Dr. Rajiv Ranjan and other colleagues from Monetary Policy Department.
28:22 To begin with, I would request Governor to make his opening remarks and thereafter we'll move to Q&As.
28:28 Sir, please.
28:29 Good morning and welcome to all of you. Nice to see you after a gap of two months.
28:38 I'm not going to say anything new but basically what I've tried to do is I have tried to capture the highlights of this monetary policy.