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[00:00:49]Hello and welcome. You're watching Business Today television. and I'm Sakshi Batra and this is what sort of show that focuses on the biggest buzz on the D street. Well, it was panning out to be a fantastic week. But then came Friday and we are seeing a sharp selloff on the D street today. The nifty is down by 200 points. 23,966 is uh the level at which we are trading at. almost uh 70% of the indices are down into the red of course led by one index that has fallen over 5% in the session. The index was also trending down by 6% in the opening uh trades as well. In fact, IT stock uh and the IT index has uh slipped to over a three-year low. many stocks within this segment. Infosys, whipro, uh talk about these stocks that are down by about uh five to seven odd percent. These are the two stocks that have hit a 5-year low.

[00:01:45]Talk about TCS which has crashed up to 7% and has hit a six-year low as well in today's trading session. Why is there a massive selloff and an IT sector meltdown yet again? Well, this is right after Accenture has uh cut its growth guidance going forward that has sparked a sell-off in the Indian IT companies.

[00:02:06]Accenture has flagged weak demand environment. It has raised concerns about the outlook for the sector yet again. We'd actually seen an aftermath of Accenture's results on Wall Street in overnight's trading session when the US listed American depository receipts or ADRs of Indian companies like Infosys was down by uh almost 10%.

[00:02:30]And that has been seen as a trickle over impact into the IT stocks as well. What we have seen is that Accenture in its results for the full year has narrowed its revenue growth guidance to 3 to 4% from 3 to 5% earlier in constant currency terms. The company has maintained its operating and free cash flow outlook for the full year. The company in its earnings call has said that the client budgets have not been increasing even with AI with spends being redeployed instead of expanding and all of the top 15 losers on Nifty 500 index today are from the IT pack.

[00:03:11]That's the kind of massive selloff that we are seeing on the IT stock. So that's one pocket that we are going to be focusing in today's trading session.

[00:03:19]We're of course all uh focusing on how Reliance Industries will be in focus.

[00:03:23]It's the 49th AGM day. Uh 2 p.m. is when we will start to get the announcements from the AGM. But before that, the stock is uh higher by about half or percent at 13:34. All eyes are on whether GOIPO DRHP will be filed a little before uh the AGM so that the announcements can be made there. So all eyes are on Reliance Industries at the moment too. And of course there are several other stocks uh that are in news that we will be focusing on as well. But first up let's welcome Tapan Doshi our guest on the program to share with us a fresh take on the markets. Uh uh welcome to you Tapan and good to have you. Uh give us a sense on this market selloff first and the IT stocks crash that we are looking at. you know last couple of weeks uh we were seeing that there was some kind of a bottom fishing that was going on into the IT stocks um you know things were recovering from a longhaul underperformance but yet again the bad news just doesn't stop for the IT sector how are you looking at it >> yeah good morning Shaki and I think even from last couple of times we have spoken about this and I've been quite bearish on it the reason is this only that one bad news will bring all these stock five to 7% down in a single day and see the problem what our industry is facing currently is that first of all of course our revenue guidance is around 2 to 4% of major IT companies I'm talking about that is too less plus discretionary spending on US front and Europe front and the clients are not spending because they are thinking that now AI can do the job much better so let's wait because the development is very fast in AI and AI is actually the 100 person job is been done by two or 3% and that is why they are not spending too much and that is a problem for us because that is our serviceoriented business that is our bread and butter so that we are problem again we don't know where it is going the way know even AI experts are saying that things are moving much faster than they expected so that is also a thing which industry knows about it so now everyone is talking about that plus because of all this now margin is getting impact of most of the companies the reason is simple because if AI can do things better then why they will pay you more from each person. Okay. So these are the some of the main reason the problem is that now even though we are saying that rupee has weakened it is helping it but it's not helping if you see over the years our margin has gone down only. There are lot of challenges from all front and now market is like know they are bearish on it. Any bad news they are just beating up all these stocks and I don't think unless unless the margin revenue goes up and some visibility comes these stocks may remain in a consolidated level for a range for a longer time.

[00:06:09]>> Absolutely. In fact, in Accenture's results, uh one of the key highlight was the fact that outsourcing bookings were down 15% from last uh year during the quarter which means that continued headwinds continue even for the IT services uh back home in India as well just like how Cap was pointing out the consulting demand remains continuing uh to be on the weaker side and the discretionary spending too is not seeing any improvement there. So the big question is how do you trade these IT stocks that are down by five six to even 8% in a single session. Many of these stocks have hit a 5year low or six-year low. That's the kind of weakness that we are looking at. Tapan, how would you look at large cap basket and the midcap basket that was in fact showing some strength uh you know that led to some recovery over the last couple of weeks in IT. See when you see the IT stocks know it's mouthwatering know it's almost 6 years down as you told know the valuation is too good but the the challenges are much bigger than that and see market will never like uncertaintity and this is what is facing by the IT see in IT all over there are two parts one is AI IT AI companies and one is IT servicesvicing which we are currently and problem is we are in a wronger side and our side is no it's being beaten up like anything and now all these open AI I and entropic they are having their own departments who will implement their AI models across then what we will do so these are the challenges which IT industry is facing currently as a investor what I'll do honestly from last one year we have not kept any of IT stock in our model portfolios also and I will keep the same unless unless things better so large cap completely no midcap as you told maybe kofo persistent but then also I'll be bearish on it because if the whole IT basket is coming down these two stocks will also not perform.

[00:08:02]That is the problem.

[00:08:04]>> Absolutely. Let's also see what top brokerage houses are saying on IT stocks today. CLSA still finds opportunities even at these levels. Brokerage firm CLSA has said that the guidance cut in the soft managed services order book have more to do with the negative macro environment rather than AI even as the increase in headcount was an encouraging sign. So CLSA has written on its note that uh the sector is still alive with some opportunities for ambitious managements while companies more exposed to discretionary demand like Infosys and Vipro will be more impacted than the stocks like HCLTech which are focusing on cost optimization. Whereas on the other hand we have City which has a cautious stance on Indian IT firms. The brokerage has highlighted the trailing 12-month bookings for Accenture were up 5% in US dollar terms while gross margins were down 10 basis points. So for Indian IT, they have said that the index is trading at 16 times its estimated FI27 earnings and despite that it remains cautious on the sector. HSBC uh we've seen a negative read uh through for the Indian IT sector in its note. HF HSBC's note has stated that Accenture's guidance cut definitely signals continued soft demand environment which is negative for Indian IT firms but they have also clarified that the softness is due to disruptions in West Asia and not AIEL productivity pressures at least for now. So two brokerage houses penciling this weakness largely on the West Asia crisis. Now HSBC has gone on to say that Indian IT services companies continue to lack the short-term triggers even as their valuations are close to a trough and Nomura uh has also talked about uh that the West Asia disruptions are likely to have some effect on revenue and deal bookings in Q1 of FY27 as well as uh that the impact spillover could also come to the second quarter too as it is not very clear as to how quickly this spending behavior will normalize.

[00:10:07]case particularly in challenged sectors such as auto for instance. So Nomura has reiterated its preference for Infosys and Cognizant from the global markets in the large cap names but co-forge and e-clerk services from the Indian markets is something that they are looking at as their midcap and small cap picks. Jeffre remains underweight on it. The brokerage has written in its note that another downward revision by Accenture implies further growth moderation in Indian IT in the near term. This may further cut um these may lead to further cuts and consequences in earnings estimates for the Indian IT sector. They've also raised concerns on long-term growth outlook and PE multiples as well in as far as their note is concerned. So this is despite the fact that we've seen it index falling by 25%.

[00:10:58]uh so far this year this is probably one of the biggest falls that we have witnessed in a single year and that's to uh which is not completed and Jeffrey's remains I underweight um talks about uncertainty persisting amid AI pressures and a volatile macro environment as well so those are the kind of statements coming in from various brokerage houses after the kind of selloff and um accenture guidance cut that we have seen today so let's try and decipher here the pain points um in terms of macro pro environment tapen the good part is that there is some inkling that there is an interim deal that has been signed between US and Iran but the fresh statements have a grain you know triggered some uncertainty because Trump being Trump he's again talking about that okay if I don't like your behavior I can come up with another round of bombings so whether this is just taco trade whether it's just you know threats uh without any meaning or whether this will be taken on as a big overhang that continues to remain without clarity.

[00:12:00]That's something that the markets don't like. So one is that the second is for the real AI disruptions that we are seeing develop every day. Um which of these are the bigger problems for the Indian IT sector short-term and long-term?

[00:12:14]>> Yeah, sure. First of all, one thing I want to tell you Saki that most of our audience are invest our retail investor.

[00:12:20]Okay. We don't have unlimited money. We are not DI we are not FI. So we have to be very careful. Don't take undue risk when you have other sectors available know like banking or power or defense or so many hotels or hospitals and they are doing well pharma then be on a safer side rather than taking adventurous know leap on the it that is my call but that is what I feel always now talking about the other factors what you told about of course see now other than it I think uh overall market is in a much much better shape because of this deal being signed hopefully Now nothing will happen. So oil going again to below 80 again in future it may go below 70. So inflation in control maybe interest rate now cycle up which we thinking they may be happening in one or two quarter maybe delayed. So that is a good thing. Fiscal deficit in control and rupee is in control that is the bigger thing. So I think other sectors are doing comparatively I'm much more know positive on that part. Plus US uh sorry with UK we our deal is happening in with US also. So all other factors are good.

[00:13:25]So better to focus on that sectors domestic oriented sector still I feel much more opportunities are there which some of the sectors name I have given but I'm very much positive on the nifty now but the problem is that it is bringing all these things but overall other sectors I think one can start investing I think worst is behind us at least 23,000 will not break >> okay um let me also understand from you on Q1 and Q2 we are just uh about um say 20 25 days be from the earnings season to start. Uh this is the se this is the earnings quarter that will show us the clear impact of the west Asia war across industries not just it. Uh there is some fear that you know this is where we could see some pain um you know displaying much more than Q4. Q4 was a rather good quarter, better than expectations in many cases. But IT sector, which started off on a completely negative note for the large caps, this quarter could be the second one and more important one where we can see what will truly happen now that we have global uh cases to look at as well.

[00:14:36]How would you trade IT sector for the next two quarters amid the earnings? No, of course you know we have to see now what is the revenue guidance and margin guidance that is the two thing I'll say more than orders win. Okay, the reason is simple that uh this margins know basically the negotiation always happening with their customer clients basically big big clients and that is where know one has to keep in mind plus attrition level and all that I think the result will be much more softer uh market is not expecting too much from all the I3 stocks honestly uh talking about other sectors I think there also there will be a problem because the old April to June quarter the oil prices were on a higher side most of the time so that impact will be there. So Q1 will be a softer for many of the sectors at least whoever sector which have raw material as a oil. So that the things will be on a tougher set but Q2 will be a much more recovery phase. It I feel still two three quarters will be in a problem but other sectors may recover faster.

[00:15:36]>> Okay let's uh shift focus to Reliance AGM. Now uh we'll talk about the things that investors need to watch out for.

[00:15:46]Uh, of course the kind of timeline we are hoping that the DRP will be filed today probably and the timeline of the IPO is something that will remain as one of the biggest focus areas. Uh, this has been a much awaited IPO. This could also as per some of the reports um be the largest ever IPO that Indian stock markets uh have seen or will see uh eventually. Uh we're also looking at a potential $4 billion listing is what is uh some of the reports are already indicating and some analyst estimates as well and of course the listing plans on Reliance retail as well is something that the investors would be watching out for any timeline or value unlocking strategy that could be closely tracked plus AI remember uh we are already getting to see so many news flows coming in with respect to a uh AI and uh the push that Reliance Industries is now going to do in this area particularly whether Reliance Industries will be uh the major conglomerate to go all out in creating uh you know um individual or native AI platforms something that has been absent and that has been one reason why foreign money has gone outside because we do not have an AI play like an open AI like an Nvidia like uh you know the other companies uh in South Korea that have been gaining traction and why the world has been attracting a lot more foreign money. So will there be any indication or announcement on that as well? Data centers, digital infrastructure is something that we are going to be looking at too. Uh how are you looking at uh you know these announcements that could be made in Reliance Industries? What according to you is on top of your radar? happen today >> only one thing Sakshi when the god merger is happening that's the only thing one is everyone is tracking honestly once they will announce now that when it is happening in hopefully it should be within 6 month or one year maybe 6 month then I think then you will see a rally in reliance otherwise the quarterly result will be normal because last two years 3 years I think quarterly results are not exciting the investors the excitement is all about value unlocking of go and reliance retail so that timeline when it is happening because last time when the EGM happened and everyone was expecting they did not told about anything and it was expectation was that it is delayed. Now what is the timeline? So I think much more dependence only one announcement.

[00:18:11]Of course the data center and the green energy uh section that is also doing well. Hopefully there will be a big announcement that but exciting will be the listing of go and detail when it is happening.

[00:18:25]>> Absolutely. And uh what about uh you know new energy business u the any progress on that updates on the solar giga factories energy storage green hydrogen clean energy projects uh how are you looking at that do you think investors are looking at visibility execution timelines future investments here >> honestly you know uh means we know that power team is going on most of the power stocks are up and for for this company also know everyone is knowing that Reliance green is doing very well and I think it is going to operation next year so and big announcement may be there but uh I really doubt that it will excite market more the reason is no because this this has been known factor so it's not a unknown factor and that is I think it will be a positive thing but not a market moving thing >> absolutely what about Reliance retail uh the earnings so far have been rather uh on a muted side As far as the retail portion is concerned in terms of profitability, how are you looking at the retail business outlook and any timeline for the retail business to also get listed?

[00:19:38]>> Yes, Reliance I think will happen only after Reliance Zo will happen. So first reliance zero will be there maybe 6 month 1 year then maybe another 6 one year 6 month 1 year then reliance Italy happened because market have should have that type of depth to know cover this type of big IPO so that depth should be there correct so I don't think they will come together it will take some time at least one and a half year or one year at least for Reliance Retail to come talking about the business the business is doing quite great if you see know it's one of the largest retail in India and uh many of their segment do well but yes margins are in pressure because of the online uh segment and all that but I think they're comparatively doing well but value unlocking will happen when the demerge happen but it will take some time >> okay got that u we'll also understand the share price performance so far this year the stock is down nearly 15% uh that's the decline in which we are going into the AGM with uh what are the kind of announcements that you believe uh can probably change or reverse this trend on the stock market performance of Reliance Industries stock and do you think therefore uh will today's AGM somehow shape the next wave of rally that could unfold for Reliance? What should be investor strategy on Reliance Industries uh ahead and amid the AGM announcements?

[00:21:01]See for a announcement of course I'm eagerly waiting no if some announcement comes on Reliance G and it is very nearby then you will see easily 20 25% movement in Reliance okay I easily can see because that will be a big value we have seen in the past even you see vanta de merger happen it is a really value unlocker for vanta also and many other companies also so that is a trigger point biggest trigger point otherwise quarterly result is going to come there also the decent result will come reason the oil prices were on the higher side.

[00:21:32]So oil to chemical business will do well and Jio is been doing well. So I'm expecting a good result this time for Reliance but that may move 10 to 15% but the bigger mover will be the announcement of demerion.

[00:21:46]>> Okay, got that. Let's also focus now on some of the other key aspects which we're going to be discussing. The other apart from the macro concerns that Indian markets have been facing the West Asia war, the tariff tantrum, policy, geopolitical uncertainty, the domestic uncertainty which is right at hand is the monsoons outlook and uh the deficient monsoons that we are seeing.

[00:22:12]We are in fact also looking at the El Nino impact being seen into the markets.

[00:22:17]Now that's being closely watched out for what the IMD has said that India has received 2.3 mm of rainfall. Um and that's 64% below normal of 6.3 mm as well. Uh this is as far as June 1st to June 18th is concerned. What we are also given to understand is that uh IMD has clearly talked about how El Nino has officially set in El Nino as for all our viewers it's an unusual warming of surface waters in central and eastern tropical Pacific Ocean and the temperature uh departure of the sea surface from long-term average temperature sets in severity of El Nino and that leads to weak trade winds moisture diversion therefore lower amount of rainfall uh as far as southwest monsoons are concerned. June uh is currently in the weak trend.

[00:23:12]They're talking about July to August where we could have moderate rainfall.

[00:23:16]September we could still have some strong rainfall. Uh but there is uh a 2.5° of anomaly a super elino impact also that is being feared at this stage too. Now uh as per some of the data that IMD has shared like I pointed out that 1st to 18th of June India has received about 40% below normal rainfall.

[00:23:39]Northwest India has received minus2% south peninsula minus 21% east and northeast about 46 46% lower and central India about 63% lower so far. In terms of the states, monsoon's statewise deficiencies. Arunachal Pradesh has received 50% deficiency. Assam 39%, Nagaland 51%, Misoram 29%. Let's come to Bihar and UP. Bihar 40% lower. UP 24% lower. Let's also talk about Uttakhan 41% lower. Then let's talk about Karnataka, Telangana. These are about 30 to 41% lower as well. um the middle states you know let's talk about Madhya Pradesh about 41% lower as well so that's the kind of rainfall deficit that we have seen how are you looking at uh this major concern um you know because karif crops agricultural output uh the impact on the fertilizer stocks thereafter everything is linked here rural demand as to what will happen to the auto sector and other sectoral demand maybe FMCG as Well, everything is linked together. So, how should investors be looking at the below normal rainfall and the deficiencies? We looking at this and how could that really lead to the stock market performance and the earnings performance.

[00:25:02]See the data which we present you know it's quite scary honestly it is much more bigger deficiency you know which everyone was expecting and see the problem is now because of this if even July August does not go well then it then the inflation again will start inching up and it will create a problem for many of our sector like FMCG and know even automoils and all that currently what is happening just oil is getting now that is little bit setting off the pain currently honestly but uh we have to track this and I think that's why know better to stay away from uh know like FMCG sector little bit you know the reason is that their margin will be really impacted and the way the June month has gone I think we have to see closely July month also August so uh there one has to be cautious and of course automoils currently I'm not too much concerned but yes after that because the oil prices come down that is compensating but yes I'll have to see the July August how the rainflies so currently It is medium but yes FMCG is one of the sector one has to stay away from it currently.

[00:26:07]>> One has to stay away from it currently.

[00:26:09]Okay, got that. Let's also focus on uh uh you know other asset classes like gold. Uh we are also focusing on this today again there is a dip on MCX gold.

[00:26:19]It's now trading at 1.45 lakh rupees per 10 g. In fact, gold is heading for its third straight weekly decline. uh bullion has already slipped below $4,200 an ounce in international markets, Indian markets. I've already shared with you of course um this is as u some uh easing of the US Iran tensions uh street of hormone shipping which has resumed plus also the hawkish stance of Federal Reserve as well uh which has dented the gold market sentiment. More Fed officials now see rate hikes going forward. Higher rates usually uh reduce the appeal for bullion assets but increase the appeal for financial assets where higher rates will attract more money uh in hopes of higher returns there. And um Goldman Sachs has now cut the gold target to about $4,900 an ounce in the near term. Previous year um the kind of forecast they had was $5,400 an ounce for this year. So they've reduced that substantially. And they also believe that silver, platinum, paladium will also remain under pressure. And uh they're also looking at um probably uh some other measures like festive season etc. to probably pull up um you know the stock the prices of gold but for now the macro concerns are weighing up on the gold prices. How are you looking at gold and silver at this point in time? uh because investors are again looking at whether these dips should be looked at for the long term as a buying opportunity.

[00:27:52]>> No, one should look at it. No, it's a natural hedge to your portfolio. So you can buy through ETF or gold mutual fund whatever but yes I know it will be a good hedge and I think it may go down 10 15% down but you can do an SIP manner investing okay we don't know where the bottom will be longterm of course it will go up and we know how volatile the gold and silver is so I think one should invest both gold and silver yes you are right now the prices are coming down but I think festival season and the merit season nar season all that coming the year end I think that the jewelry business all that they will be benefited on a lower gold prices. So overall uh long-term I'm bullish. Yes. Medium-term I think there may be a weakness in gold and silver but it's a buying opportunity.

[00:28:35]>> Okay. Got that. Tapan. Thank you so much then for being with us on the show and helping us with your insights on various topics today. Uh we're going to be wrapping up on that note on what's hot.

[00:28:45]Uh but stay tuned viewers. We have much more uh for you on the markets on the other side and we have an exclusive conversation with Moiqu coming up right after this break. So interested in case you are as far as Mobyquick's journey to a full stack fintech player is concerned from just being a wallet company because recently the company's received NBFC license and of course a PAP license as well approval. So let's try and understand uh what's the future journey of Moiqu going to be in case you have the stock of Moiqu in your portfolio.

[00:29:17]This is your opportunity to hear from the management uh you know to understand what is their vision going forward. So stay tuned for that.

[00:29:41]From how the markets move today to what's setting the stage for Tomorrow.