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Get all your stock-related queries answered by our technical and fundamental guests with Alex Mathew on Ask Profit. #ndtvprofitlive
-#Sensex loses 300 points; #Nifty trades over 100 points lower
Get all your stock-related queries answered by our technical and fundamental guests with Alex Mathew on Ask Profit. #ndtvprofitlive
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02:15Hi, thanks so much for joining in.
02:17You're watching Ask Profit on NDTV Profit
02:19and my name is Alex Mathew.
02:20This show is geared towards getting you answers
02:22to all of your stock-related questions.
02:24Whether they are short-term, technical in nature,
02:26or long-term fundamental, we've got you covered.
02:28Now today, of course, the big event that we've been tracking
02:31is the outcome of the latest meeting of the
02:34Monetary Policy Committee of the Reserve Bank of India.
02:37They voted 4-2 in favour of holding the policy rate unchanged
02:42and also 4-2 in terms of the withdrawal of accommodation stance
02:48that they have maintained.
02:50There are a couple of conversations that emerge from the speech
02:56that relate to banks and we'll talk about that in just a bit.
02:59For now, let's first take you through what's happening
03:01with the equity markets.
03:02You have the benchmark Nifty 50.
03:04That's trading with cuts of about 0.4%.
03:06It is just below the 24,200 mark at this juncture
03:11and the broader markets are actually looking better.
03:14You have the mid-cap index that's gaining about 0.2% or thereabouts
03:18and you have the small-cap index that's up about 0.4%.
03:21This, remember, is in a global context that's
03:24a little bit weak for risk assets.
03:26You've seen cuts overnight on Wall Street
03:29and you have seen cuts in the Asia-Pacific region as well.
03:32So to that extent, the Indian equity markets
03:34are not doing too badly, to say the very least.
03:37Now, we are, of course, looking at a situation
03:40where looking at several indices that are trading in the red
03:44but the Nifty Bank, interestingly, is holding on to green.
03:47It is trading up as much as 0.1%
03:49but let's actually look at that sectoral breakup
03:52and that should give you a perspective of what's doing what.
03:56In fact, it's only the banks that are doing reasonably well
03:59and the pharma space that is up about 0.5% or thereabouts,
04:020.6% or thereabouts, and media that is up about 1%,
04:05everything else more or less in the red.
04:08Let's focus in on two aspects of the speech
04:11by the Reserve Bank of India Governor today
04:13that's related to banks.
04:15The first has to do with the banks struggling
04:19to get retail deposits because,
04:21and this has been spoken about for quite a while now,
04:25a lot of investors choosing to move money out of deposits
04:28into other asset classes, including into equity.
04:32But the thing is that the RBI Governor is saying
04:35that this could, in fact, pose a structural liquidity issue
04:38for banks going forward
04:40and it's certainly something that needs to be fixed.
04:42Listen in.
04:58As a result, banks are taking greater recourse
05:01to short-term non-retail deposits
05:04and other instruments of liability
05:06to meet the incremental credit demand.
05:09This, as I have emphasised elsewhere,
05:13may potentially expose the banking system
05:16to structural liquidity issues.
05:18Banks may therefore focus more on mobilisation
05:22of household financial savings
05:24through innovative products and service offerings
05:27and by leveraging fully on their vast branch network.
05:32All right.
05:33Now, what is the outcome of something like that?
05:36Because banks ultimately are going to have
05:38to attract customers to invest
05:41and to put money into deposits.
05:43We'll talk about that in just a bit.
05:45But there was another aspect as well
05:46that related to regulations
05:48that govern the loan-to-value ratio
05:51that is mandated when banks are lending.
05:54Now, this simply relates to collateral that is offered.
05:58So, for example, if you talk about a housing loan,
06:01the house itself is collateral.
06:03The loan is a fraction or a percentage
06:06of the overall value of the house.
06:09And there are regulations that govern
06:11how much lending can take place.
06:13Now, what happens is that banks offer top-up loans
06:16on top of things like housing loans as well as gold loans
06:20and this has emerged to be a bit of a problem
06:23according to the Central Bank Governor
06:25and here's what he said.
06:28Banks and MDFCs have also been offering top-up loans
06:32on other collateralized loans like gold loans.
06:36It is noticed that the regulatory prescriptions
06:39relating to loan-to-value,
06:41that is LTV ratio, risk weights
06:44and monitoring of end-use of funds
06:46are not being strictly adhered to by certain entities.
06:51I repeat, certain entities.
06:53Such practices may lead to loan funds
06:56being deployed in unproductive segments
06:59or for speculative purposes.
07:02Banks and MDFCs would therefore be well advised
07:06to review such practices
07:08and take necessary remedial action.
07:11Now, of course, there's lots more beyond
07:13what I have highlighted in the speech
07:16and there will be a press conference at 12 o'clock
07:18that will elucidate these points further.
07:20So I would encourage you to stay tuned for that.
07:22For now, let's introduce the guests that we have today
07:25that will answer all of your questions
07:26and speak about what I have just highlighted.
07:28We've got Lancelot Dekuna,
07:30who is the CIO of ValueX WealthConnect
07:32as well as Rajat Bose, who is a research analyst.
07:35Thank you so much to both of you for taking the time
07:37and good morning to you.
07:39Lancelot, I'm curious what you have to say about
07:41what banks can do to mobilize deposits
07:43or to get people to deposit.
07:45To me, the only solution is to increase the rate of deposits
07:49that is offered or the rate of interest rate that is offered
07:52and that will result in a scrimping of net interest margins
07:55and let's face it, a lot of banks have enjoyed elevated NIMS
07:59or net interest margins for quite a while.
08:02So why don't they bite the bullet and increase the rates
08:05and try to get more customers?
08:07So I think, you know, one is when the rates go up,
08:11banks try to also maintain the spread that they have
08:14and so they have to lend at higher rates.
08:17Now, you know, when you start lending at higher rates,
08:20there is always, you know, you have to go down the value chain
08:24in terms of attracting higher risk assets
08:27and that can, you know, result in a situation
08:30where your credit costs go up
08:32because you may have a larger amount of NPAs, etc.
08:36So I think given that background, banks are a little reluctant
08:40because on the lending side also there is pressure
08:43to lend at lower rates because good customers,
08:46given the liquidity that is available,
08:48let's say general liquidity available in the banking system
08:51or even, you know, interest rates,
08:54lower interest rate funds available to various good customers,
08:58it'll be difficult for banks to keep finding good customers
09:01borrowing at higher rates.
09:03So I think in that sense, banks are also constrained
09:06by the rates at which they have to lend out
09:09and given that, they have to then look at trying
09:12to lower the cost of their funds.
09:16Otherwise, their net interest margins get squeezed
09:19and that would result in further problems for them.
09:23Okay. In that context, what would you say are the top banks
09:27that you prefer at this juncture?
09:29So at this juncture, in terms of valuation,
09:32I would look at, you know, maybe a Kotak Bank
09:35has a fairly good franchise for deposits,
09:39has reasonably large CASA ratio.
09:41State Bank of India has almost, you know,
09:4444% of its CASA ratio is pretty good for State Bank of India.
09:50They have the widest network
09:52as far as gathering of deposits is concerned.
09:55So I think these two are in the space where, you know,
09:59you can look at them expanding their franchise
10:03in the deposit space.
10:05And I think HDFC Bank is consciously making an effort
10:08to increase its deposit base because their, you know,
10:12the credit deposit ratio was a little bit elevated
10:15in the last two quarters and they've been looking
10:18and trying to bring down that credit ratio.
10:20So HDFC Bank also in the next two, three quarters
10:23will bring down that ratio
10:25and that will be a fillip for the bank itself.
10:28Okay. Fair point. Let's jump into the questions
10:30and quite a few already have come through.
10:32If you're tuning in right now,
10:34the number that you see at the bottom of your screen,
10:36that's where you send the questions to us.
10:38Rajat, sorry to keep you waiting.
10:40The first question to you,
10:41it's coming from Belgavi in Karnataka
10:43and it's from Amul Biradar.
10:45He's asking about IOC, Indian Oil Corporation of India,
10:48which he's bought at levels of 180.
10:50The stock is currently trading at 170.
10:52So he's asking whether to hold on
10:54with the hope of recovering his buy price
10:56and also making a profit or should he book the loss?
11:02Regarding IOC, what I would say is that
11:04IOC is currently at 170.
11:08I mean, it is almost on a several year high.
11:14It has come down a bit from 180.
11:17So I would suggest him to continue holding on.
11:22And I really don't know what price he has bought,
11:27but then here the percentage of loss at the moment...
11:31Rajat, he's bought at levels of 180.
11:34Oh, 180.
11:35And in that case, if he's a short-term player,
11:38then the stop loss should be placed below 165.
11:42And there is a possibility that it may bounce back.
11:46And if it bounces back above 176,
11:49then 180 can also be reached.
11:51But if you are buying a stock near to the all-time high,
11:55then you will have to suffer for some time.
11:58Yeah, that's a fair point.
11:59Jubilant Pharma is the next counter that we're talking about.
12:02And this is a question coming from Raghavan.
12:05And he's bought this as many as three years back.
12:08He's got 300 shares, but he's not told us
12:10what level he's bought it at.
12:12He's asking whether to hold it or dispose of it.
12:15On the fundamentals, stock trading at 850 or thereabouts, Lancelot,
12:19what's your view on this one?
12:21So I think it's a hold, it is a continue to hold
12:24because, you know, Jubilant Pharma has done well
12:27over the last two, three years in terms of its growth,
12:31both on the generic side.
12:34And you are seeing, you know, significant growth prospects
12:38for pharma, Indian pharma,
12:39especially the pharma companies who are exporting to the US.
12:44They would see increased, you know, business coming out of there
12:47and thereby improvement of margins as well.
12:50So I would say that it's worth holding on
12:53and, you know, you will see other pharma companies also benefit.
12:56in this scenario.
12:58Okay, fair point.
13:00We've got Tata Power.
13:03And I'm not really sure about the buy price.
13:05It sounds incredibly low.
13:07So I'm going to avoid mentioning that.
13:09We've got D. Nageshwara Rao who's bought
13:12and he's wondering whether to hold on to this.
13:14Stock is currently trading at 422.
13:16What are the key levels to watch, Rajat,
13:18based on what you're seeing on the charts?
13:20Based on the charts, 410 to about 407
13:25could be a good support area.
13:27Below that, it will be 399.
13:29Point is that this stock is actually showing a distribution pattern
13:34over the last few months, starting May.
13:37And unless it takes out 460 to about 465,
13:41there will not be any breakout and the bullish signal will come
13:45only when it takes out 460 decisively.
13:48We've got a question on Bajaj Hindustan Sugar.
13:53I'm trying to pull up the share price
13:55and see what it's currently trading.
13:56Actually, if we can pull up the chart, guys,
13:59while we're speaking about this,
14:00it's not really doing anything much in trade today.
14:03And I'm wondering if you have a view on this landslot at all.
14:07And if not this, then another stock in the same space
14:10because we've got Vaishnavi from Hyderabad
14:12who's bought 3,000 shares at 41 or thereabouts.
14:15And she's wondering what to do with this.
14:17So I think my view is that sugar is always a cyclical commodity
14:22and you have to buy when the prices or the cane prices
14:27are on the lower end.
14:30Because, again, it's also a little bit of political issues
14:34regarding export of sugar being permitted, not permitted.
14:38These things happen from time to time.
14:40So given that we just had a good run in the sugar stocks,
14:45I think it's probably at the higher end of its valuation.
14:51And so one should avoid buying at this time.
14:53But if you are in profit, you can look at booking profit
14:56and wait for the next cycle of correction.
15:00Yeah, that's a fair point.
15:01It has, in fact, done incredibly well over the last year,
15:03as you pointed out.
15:04Pawan has got the next question.
15:06He's got Canberra Bank at levels of 121.
15:10He's got 3,000 shares, a large number.
15:13And the stock is currently trading below that buy price
15:16at 107 or thereabouts.
15:18Should he hold or should he sell?
15:19Rajat, what are the prospects for this counter?
15:23Currently, Canbank is actually tasting its 200-day
15:28exponential moving average.
15:30200-day exponential moving average as of today,
15:33it is standing at 109.55 as we talk.
15:38If it were to fall below 107, then I would say one should get out
15:43because sometimes the 200-day is breached for the time being
15:47but then bounces back again.
15:49But since it is tasting 200-day exponential moving average
15:53for the second time, barring that June 4 nosedive,
15:59there could be some institutional buying
16:02because normally what we see is that whenever the 200-day
16:07exponential moving average is tested, institutions or big players
16:11come in to take some positions.
16:14If that happens, then it should move beyond 115
16:18and show that there is some real buying.
16:21In that case, the investor can continue to hold.
16:25Otherwise, put a stop loss below 109.55 on closing price basis.
16:31If it goes below that, exit.
16:33Okay, fair point.
16:35We've got Bandhan Bank to talk about next.
16:37And this is a question from Karthik.
16:38He's writing in from Tamil Nadu.
16:40I have asked him whether he's seeking a long-term fundamental view
16:43or a technical view but he has bought at levels of 236.
16:46The stock is currently trading at very close to the 200 mark
16:49and he's wondering whether to average his buy price at this stage.
16:53In the absence of a clarification,
16:56I'm going to come to you, Lancelot, on fundamental view.
17:00What would you say about this particular bank?
17:02And if you bought at levels of 236, not too far away from the current market price.
17:06It is lower though, having said that.
17:08Would you average at this point?
17:10No, not yet.
17:11Because, you know, like we had discussed earlier
17:13in terms of the macroeconomic environment for banks becoming difficult.
17:17And Bandhan Bank is again focusing at the lower end of the stratosphere
17:23because earlier they were predominantly into microfinance.
17:27So that segment of customers are going to find it more and more difficult
17:31in terms of repayment.
17:33And so since there is the outlook on the lending
17:38as well as deposit side is looking difficult.
17:41Plus with RBI trying to clamp down on misuse of funds, etc.
17:46It's going to be a very challenging time for some of these banks
17:49over the next 12 months.
17:51So it's better to stay out.
17:53And in case they really come down and you see that the worst is behind,
17:58then one can look at adding on.
18:00Yeah, okay, fair point.
18:01So watch out for the earnings certainly before you take a call.
18:05Lancelot and Rajat, we have to slip into a very quick break.
18:08Viewers, we'll be back on the other side to take more of your questions.
18:10So do stay tuned.
20:35Welcome back.
20:55You're watching Ask Profit.
20:56And we're in the midst of taking all of your questions.
20:58By the way, I hope we can play that.
21:00There you go on the screen there.
21:01If you're tuning in for the first time,
21:03that's the number that you send your questions to us on.
21:05The first question we're taking on this side of the break is from Satish.
21:08And he's asking about Shaktipumps.
21:10Can it be bought at the current level as a long-term portfolio stock?
21:15The stock is currently trading at 4,545 or thereabouts.
21:20What's your view on this one, Lancelot?
21:22So I think the outlook is definitely good in terms of the business
21:27for Shaktipumps and the other pump companies as well
21:31because they are seeing a lot of order inflow.
21:34Margins have been good because raw material prices have also come off.
21:38So to that extent, yes, profitability has seen an improvement
21:41over the last two years or so.
21:44But given the valuations, you know, the stock,
21:46if you look at the last 12 months, it has done phenomenally well.
21:50But looking at the valuations, it's factoring in, you know,
21:55maybe the next two years,
21:56earnings are already getting factored into the price.
21:58So I would actually say that it's better to wait for some kind of correction
22:03before looking at entering.
22:05Otherwise, you are paying two years ahead, high earnings up front.
22:10Yeah, that's a fair point.
22:11And for a stock that has gained over 500% over the last 12 months,
22:16that's certainly a valid argument to make.
22:18Sumit Ghosh from Kolkata is asking this next question.
22:21He's got IdeaForge technology,
22:23which he's bought at an average price of 700 rupees, Rajat.
22:27I'm hopeful that you have enough data to give him a six-month perspective
22:31on what to expect in the prices.
22:33What is this stock, IdeaForge?
22:36That's right.
22:37Okay, okay, I got it.
22:39It is not a buy-worthy stock from a technical point of view
22:47because although it is forming a base,
22:53but then there had been an attempt in the month of June
22:56throughout June and July, it somehow managed to stay above.
23:01And after that, late July, it started falling from 850,
23:05and current level is 710.
23:08So there is a downtrend.
23:10So if it were to fall below, say, something like 675 or so,
23:18then one should get out.
23:20I don't like this stock from a technical point of view.
23:24I have no idea about the fundamentals,
23:26but technically it's not looking great.
23:28Yeah, okay, fair point.
23:30I'm coming back to you on JM Financial, Rajat,
23:33and this is a stock that is currently trading at very close to that 100 rupee mark,
23:38and we've got Ravi, who's tuning in from Andhra Pradesh,
23:41who's looking for a short-term view.
23:43He has bought at levels of 90,
23:45and so therefore is making a little bit of money on this trade.
23:48He's looking for a short-term view.
23:50Should he hold on?
23:52Well, I would say he can hold on.
23:55If it is a short-term trade, stop-loss can be placed anywhere below, say, 93.
24:02And on the upside, once it crosses 101, 102, this would be a resistance zone.
24:09The next resistance zone would be 105, 105.5.
24:14So this is the target that he can think of if it is a short-term trade.
24:19Once it gets there, he should make profits.
24:22Okay, Hoodco is the next counter that we're talking about,
24:25and it's got a lot of focus and a run-up to the budget, of course.
24:29So we've got Vishnu, who's bought at levels of 320, and he's got 1,500 shares.
24:34He's wondering whether to hold or sell.
24:36The stock is currently trading below the buy price at 292.
24:39Lancelot, on the fundamentals, would you hold if you bought at level 320?
24:44No, I think because fundamentally the stock is really expensive.
24:49So one should look at maybe looking out profits if one has bought it at a high level.
24:56Or you have to wait for a serious correction in order to average out if you're really a long-term investor.
25:02Got it. All right. That's the view on Hoodco.
25:05Chetan has got a question on IndusInd Bank.
25:08Is this the best time to add or buy?
25:10IndusInd Bank needs a suggestion, but he's not stipulated whether or not it's a short-term view
25:15or a long-term perspective that he's seeking.
25:17I will come to you, Rajat, on the charts.
25:19For a stock that is trading at very close to 1,340, would you suggest a fresh buy at this point?
25:25Not at all. I would say one should exit because this has already broken down all its support
25:31and currently trading around, say, I think 1,338 or so.
25:35It can go further down. It can test 1,280.
25:39I would suggest getting out of it.
25:41There is no redeeming feature I can see from a technical point of view.
25:46And with RBI becoming slightly hawkish, I don't know what is going to happen going forward.
25:53Only banking stock that I could see technically still looking better is HDFC Bank.
26:00Okay. So it's a buy call on HDFC Bank.
26:02The next question is for you, Lancelot. It's on data patterns.
26:06And we've got Mala from Coimbatore who's bought at level of 3,406.
26:10Should she hold or average for a target of 4,000 rupees?
26:14How long should she hold it?
26:16And that's quite an upside from this current juncture.
26:19Is that something that you can see in the future?
26:23Is that close to a one-year target?
26:25What are the factors that will have to align for it to hit that 4,000 mark?
26:30So I think, you see, data patterns has been rising a lot on the sentiment that is being built in for,
26:36you know, companies that are focused on defense.
26:39And it trades at a very high multiple based off out of its current profits.
26:45However, they have been associated with HAL in terms of providing electronics
26:50for various jet aircraft orders that HAL may get in the future.
26:56And probably that's one of the reasons why there's a significant buying happening.
27:01Or, you know, people are buying into this anticipating that as and when that order gets hit,
27:05they are one of the preferred suppliers to HAL for, you know,
27:09the various electronics and guidance systems.
27:12And that could give them a big order.
27:16But these are all things that will happen in the future.
27:19And, you know, factoring them into the price right now becomes very, very optimistic.
27:23So I would suggest that you just wait with what you have.
27:26And if there is any serious correction in the stock, then one can look at averaging.
27:30Over a longer period of time, you will definitely see good returns from this stock.
27:35Okay. Rajat, last question we're taking and quick view on a couple of stocks,
27:39ITI and Vedanta. We've got Shoumy, who's riding from Kolkata,
27:43who's bought ITI at levels of 318 and Vedanta at levels of 460.
27:49Would you hold on to both of these or would you sell?
27:53No, I would say that if you are looking for a short term trade,
27:57then Vedanta can be held at current prices with the stock below say 400
28:03and upward expectation could be 450 to about 480.
28:08And ITI, I would say one can hold at current prices.
28:12Okay, fair point. Rajat, as well as Lancelot,
28:15thanks so much for taking the time and pleasure having you on the show.
28:18Most welcome.
28:19Yours, thank you so much for joining us on this program as well.
28:22Hopefully, this benefited you.
28:23Up next is everything to do with the monetary policies, so do stay tuned.
29:19Transcribed by https://otter.ai
29:49Transcribed by https://otter.ai