Money Control June 1st; Closing Bell - Market Outlook

追加: 2026-06-03

[00:00:00]We have with us market experts Unil Surmanam joining us to decode what lies ahead. So Unil sir, good afternoon. So good to have you back. But markets clearly at tent to hook. So how are you reading the sentiment for India because we have the global markets which are already at record highs hoping for a peace deal could be on the horizon but we are still subdued despite the cool off that we are seeing in the crude oil.

[00:00:21]So yes um your first thoughts. Yes, but I think the cool off is only relative right at 92 93 it still hurts India. I don't think India is out of the woods from an impact of crude at the mid90s levels. We need to get it below 80 which looks difficult. So I think the first thing is that uh we also I think have to wait for the RBI policy which is a big uh question mark today because can RBI ignore inflation which is high uh though it's supply side technically supply side inflation is on not a monetary policy thing it's more of a fiscal side that you got to address the issue but uh RBI cannot ignore it. Though the market is I think very apprehensive about how the RBI stone is going to be. The second is though the GDP data is due this week.

[00:01:13]It's still past GDP data but the RBI will put out its own GDP quarter by quarter estimates and inflation quarter by quarter estimates for the rest of the f financial year. I think those are going to be key in terms of because I think RBI is generally reliable on data in terms of the market places a lot of value to that. So I would say the RBA policy this time is relatively more important and people wouldn't want to take positions before that and part of the reason for the banking sector being under pressure today. I would attribute to that situation. The other thing is of course is that while you're mentioning the geopolitical easing I'm not sure that it's really an easing because Iran still you know is not accepting it.

[00:01:55]Israel continues to advance further into Lebanon and there is a hidden fear that Trump is just buying time because by these talks and he's actually replenishing his ammunitions and army and he won't rest until he achieves his goal of securing the nuclear related assets of Iran. So if if this is all just a ploy to keep the hang in play while America gets it act in order then it's very worrisome. We don't know that for sure but just that the fact that multiple proposals have been come at the ground level between the team right either they have been talking in Pakistan or they're talking in you know Oman katar that area but the fact is that Mr. Trump's not signed off on it and Iran also keeps saying that the ceasefire has been violated and so things are back to square one. So I think that the geopolitically I wouldn't still call it an ease. Yes, compared to 125 126 Brent crude you are at 92. Yes, it's a $30 ease but for India it's still a$25 to $30 more than what it was prewar. So I'm not sure that geopolitical hangover for India is over.

[00:03:06]it's still there and for FIS right of course even they will look at the RBA policy to see whether as a nation we are going to address this issue so for the government has been passing on small increases in petrol in LPG and gases and all of that but really speaking the burden today still lies on the government of India's fiscal situation so foreigners would like to see whether that is going to get addressed or is there going to be a slippage in fiscal deficit this year I don't think the government has come out with a clear-cut policy yet on how they're going to handle this this spike. Uh uh it's it's I think that there's a feeling that they're just hoping that the war would end and that this thing would go back to normal which is not something the FIS are comfortable. So you see consistent selling yes the pace of selling has come down from the March month of war which was more than a lakh crores to about 50 60,000 crores in the next two months.

[00:03:59]Yes, it's half of that month's uh selling but it's still selling and your markets are not going to get a leg up without some kind of a support from FIS at least to start with to bring down the uh selling pressure. So I think those flows are important and we are looking at the earning season and saying it was better than estimate and the real reason for that is one is market itself had toned down its expectations and second is that you had the raw materials accumulated before February in the month of January and February which were used in March. So I'm not sure that those quarter four earnings are any reflection of the impact of the war. It's your Q1 earnings season starting from July 10th which will show you the real impact of all the crude and gas price increases on various uh sectors. So domestic investors are flush with money whether it's retail HNI mutual funds insurance and they are continuing to support and buy. I think this month also against what are 50 55,000 crores this month money made uh of Sapphire selling they bought more than 80,000 crores. So they are supporting the market. So you can say that the market may not correct deeply right it's going to consolidate because for uh DIIS and for retail and HR investors sharp corrections any price are a value buy and they go and pick it for example is going through that phase now the year-to- date correction of more than 20%. So any slightly good news something the NASDAQ goes up it's it's a it's a reason to go and do a value buying but the point I'm trying to stress is that domestic liquidity support will continue to be strong to support but they'll wait for correction before they step in and buy so domestic liquidity is not going to take the larger cap part of the market up yes in the midcap small cap and micro cap where FIS don't have a big part to play you will find that selective domestic buying can take it and the midcap index also recently touched its lifetime highs. So the broader market presents a different picture from the larger cap uh space of the market and so uh for that part of it to really go up your nifty sensex or your nifty 100 or or your 150 top 150 stocks we need strong fi participation which I'm afraid is not going to happen in a hurry that's a reality we have to live with there will be sector rotation happening because uh the to buy are also needing to book profits in sectors so for example publisher banks are summary who's suffering from that because they've been among the best performers in the market at any time of time profit booking even today I think it's happened but Mr. banks tends to be a soft target for profit booking. So sector rotation is again a key theme which is going to persist uh through this period. So real clarity step one RBI policy step two July earning season three war hopefully by the earning season starts if you see a clear end to the war which I'm giving it another month to sort itself out without all of these happening you are not likely to get a strong bullish over undertone to the market but like I said I believe that domestic investors Okay, I think uh there's a bit of a technical snag over there. So, we'll just try to reconnect him. But of course, you know, like uh Sunil was pointing out, of course, there are three main key variables for the markets to determine its direction. And first is of course the RBI policy meeting which is due this week and of course what is going to be in terms of the commentary something that we'll be watching out for as well and of course you know the resilience in the broader end of the markets of course uh from the past two days we are seeing a bit of a profit booking but still uh you know the broader end of the markets have been fairing well than how the large caps have been behaving in the past two trading sessions but yes apart from that we'll also be watching out for India's GDP growth data which is due on June 5th itself and we'll watch out whether or not you know the 7.8% 8% that we saw in the in the quarter three is going to get sustainable and of course if there is what's kind of cuts we're going to see in terms of growth forecast for India itself but yes today the markets have been fairly choppy if you look at uh the both the headline indices have seen about more than half a percent cut the market breath has severely worsened with about NC advanced decline ratio at about 1 is to2 and wix has severely has inched up as well and uh the pocket which has emerged as an outperformer that's your IT stocks nifty IT index X up for the second consecutive day. It's showcasing gain of about 2 and a half% as well.

[00:08:34]Apart from that you have M nifty metals also which did quite well with about half a percent gains coming in for there and uh like you know Sunil sir and of course Ajit was also talking about that the bank nifty needs to do the heavy lifting for uh nifty to make you know a further up move going ahead. So yes the bank nifty has you know seeing a bit of a decline in today's trading session.

[00:08:55]Both the private lenders and even the PSQ banking stocks have taken a hit today. If you look at the banking bank nifty index, it's down by about 1% and some of the losers in the bank nifty, we can see the likes of HDFC Bank that's showcasing a decline of about 2/10en of a percent. ICIC bank also with about 1% decline, SBI, Bajage Finance, all of these uh financial stocks have taken a hit in today's trading session as well.

[00:09:20]But apart from that you had the auto index also not doing well despite what we saw a fairly good uh sales momentum for the month of May. Nifty auto index also showcasing a decline of about 1 and a.5% but yes in terms of May May sales we've seen that uh Tata Motors PV sales had risen to about 42% on a year-on-year basis. Even Marauti has also recorded good sales numbers for the month of May.

[00:09:46]Eminem with about good sales numbers of about 11% growth. Bajach Auto with about 20% growth. So yes, so you know the largely it's been an it's been a good uh sales performance when it comes to all of these auto companies for the month of May. But still some bit of sideways action we have seen given the kind of uh broad-based selloff that we have observed in a market like this. So yes, that's your nifty auto index uh not behaving uh as per what the numbers have indicated for the month of May. Apart from that you can see nifty FMCG index has definitely cooled off. This particular index is showcasing a decline of about 2% as well. But yes uh coming back uh to Sunil sir of course you know Sisa you were talking about the June policy meeting what are your expectations? Of course the consensus this time has been hold but uh do you see a room of rate increase for FI27?

[00:10:37]>> No I think it's early. It may be only the next policy. I think this policy they will still look beyond the war. So I think that as they I don't think that they will recognize the risks okay and they'll say we'll keep a watch. So I think there'll be a cautious tone to the RBI but I don't think that they ready to hurt growth to a rate hike. Right? So the only reasons for a rate hike are one if they are comfortable that growth will not get hurt by a rate hike. That's number one which partly may be there because credit growth is doing well.

[00:11:08]Number one one number two is from a currency management point of view right a few days before it was a thing that a rate hike could help get flows in right because when you hike rates your attractive rates will get you money but I think the way the RB has controlled the rupee over the last few days I think there's confidence that the now the rupee at the 95 level is fairly stable so I think that fear of that as a trigger for a rate hike I think is not there right now the monsoon also is going to be underway. The RBI will not want to jump the gun and they'll wait for the spatial dispersion of the monsoon. So I think they'll just keep things on hold and push it forward to the next policy. But the only issue is I think there's a language of the RBI governor is as important as the decision of the RBI monetary policy committee. So I think a lot of questions will be around that in terms of at the press conference. So I think that will determine the direction. I do not expect a rate hike. It's a pretty harsh move at this stage in time. But I know that there's a 10 to 15% of the market is expecting a rate. Bulk of them are still staying on a hold.

[00:12:15]Got it. Got it. S you were earlier talking about the resilience that we are seeing in the broader end of the markets compared to the large caps. Given the kind of earnings you've seen in the March quarter, it's been you know it's been spectacular for the broader end of the markets. But going ahead with the kind of inflation and macro risks that we are seeing, do you think that the rally could run ahead of the fundamentals?

[00:12:37]rally running ahead of the fundamentals definitely from a June the first quarter results right they are going to be definitely below on a quarteronquarter basis compared to Q4 undoubtedly but at the same time and I was trying to look at what the market is trying to guess or know consensus estimate for one year forward PE I'll just give you a sense the market has already been a bit conservative so I think that if I remember right the midcap had showed about 30% earnings growth the small cap had shown about 36% and then the micro caps had shown about 42% earnings growth for the quarter but when you look at the projection for the full year it's only around 18 20 and about 24 I think for the same so against the 30% earnings growth for the quarter 4 the for the year they're only expecting an 18%. So I think to some extent the market is trying to break in a bad Q1, a reasonably bad Q2 and then a recovery from Q3 and Q4. With that in mind, a lot of the buying that happens in the mid and small cap is forwardlooking because especially domestic fund managers are not buying quarterly earnings. They are buying what they see as a three-year outlook on the EPS growth and discounting it right from a DCF technique. So I think to that extent if they are still comfortable with a very strong double digit between 80 to 24% for the broader in the market for the year then and that sustains for fi28 I don't see any reason why buying would follow up but if you're going to then take the trailing PE and compute the valuations yes you will say that the price is running ahead of the earnings but I think one shouldn't just at it one has to look at it as a forward-looking picture and perhaps if you could use a P growth kind of a ratio instead of a P ratio show it'll make things a little more reasonable. So I would still say that optrically yes we could be in a situation where the price is running ahead of the earnings but I'm not sure that that's an indication of overvaluation as much as an expectation of a decent future growth which I think even with the war and all that concern I don't doubt that the domestic economy uh you know I think it can sustain a six six and a half% GDP growth rate for the next two years. So it's not that worrisome for me. But like I said, you know, when you look at the optics, it will probably look overvalued at the broader end of the market.

[00:15:02]>> H okay. Okay. But you know, markets, they've largely focused on crude oil. Do you think monsoon could be the next trigger for a weaker consumption for the markets that is yet to get priced in?

[00:15:15]>> Well, uh see the problem with the monsoon predictions is that they go keep undergoing changes. number one and number two I'm less of a believer in the actual quantum of the monsoon versus the spatial distribution of the monsoon. I don't mind if Bombay, Delhi, Chennai, Bangalore get far less monsoon but as long as the agricultural sewing areas get good monsoon. So simply looking at an overall number and saying oh it's 90% of long-term average doesn't mean anything. You have to see that it does it in the agricultural farmlands where the sewing is to take place is the monsoon coming at the right time. So second is the timing of the monsoon. So despite a below average projection for the monsoon because of El Nino if there is adequate rainfall in the correct areas right it should still sail through so I won't jump the gun and expect are we also not to jump the gun as far as the monsoon is concerned yes the market is apprehensive today undoubtedly and if you see corrections in the FMCG space and all of that are naturally due to a weak monsoon expectation hurting demand there undoubtedly about that but I am still remain a reasonably optimistic person that even at a 90% monzone as long as it's specially well distributed and timing wise it falls at the right time we could still you know come through the year with a decent food grain production without too much impact on uh prices the crude part of it will of course affect prices that remember fertilizer prices are linked to gas prices which have been rising so that part of it will be there but otherwise I don't see that the food grain production necessarily at this point in time you need to be very bearish about it and say that oh the whole rural consump story is gone let's wait a bit for that >> okay got it so you know let's talk more spec sector specific we've seen that IT stocks is doing once again in well in today's trading session as well it bugged the overall uh the subdued market sentiment and we have seen that the AI disruption fears have led to one of the sharpest derating uh that the sector has seen in years do you think the sentiment has turned excessively negative and from here on any positive news will be taken well but uh is is it too early to read into the short-term bounces that we are seeing in the sector?

[00:17:28]>> I agree with the first part of your answer that yes there has been excessive derating of the IT sector. For example, I was looking at the calculations that people are doing for various companies and the sectors and what's happening is the current valuations are indicating that is as of in 5 years time the IT business will not exist. So I don't think that's going to be the case right you if you already dig dig deeper I would rate that the IT companies are actually working very hard on AI uh there is an indications that most of the customers of the IT companies are willing to give them a chance to use AI and help them in the AI re-engineering their of their businesses I'm talking about the user businesses so it's not like IT companies have been straight away said oh you're useless for AI where the problem has been is on their public relations part on the way they have handled the analyst phone calls especially of FIIS in terms of their AI readiness right so that's one second is also is that this this negative image of AI hurting IT was overdone for the example that AI is going to transform a huge list of user industries whether it's consumption banking manufacturing retail everywhere is going to be used but somebody has to guide those companies in the adopting the right AI model doing it the threat that AI will displace an IT company and a user company will just take AI and use it is far-fetched I think the answer lies somewhere in the middle yes definitely the models that the IT companies have so far been thriving and succeeding on as a per per hour or per employee has to undergo significant change but I believe that these companies can do it so the doomsday scenario which has been currently been plugged into their valuations I believe is overdone right that's agreed but at the same time I don't agree with the second half of thing that this is a this this is the boom bus kind of a scenario I believe that what has happened to it is this shifted from a growth sector postcoid which adopted everybody thought that in the internet of things a new scheme of things postcoid work from home everything digitized that it would be like super growth that dream has been uh kind of killed and it's now more of a dividend deal value sustainable businesses for long-term available at reasonable valuation story. So when that readjustment process I'm not sure it still happen a lot of people still have it as a growth part of their portfolio they will have to shift it to value and depending on what allocation they think it deserves as growth versus value will definitely get a smaller allocation but there could be new set of buyers like a pension funds and all those people who want a regular dividend yield good companies which it fulfill that so there is a balance there so for me it is first for any investor look at it as your value pick and allocate that right amount there. Now if you think that you've had too much to it, you may need to correct it. Fine. But if you not, maybe you can add. So that's one one.

[00:20:32]Second is that it is also very ripe for a technical not technical but a tactical short-term outlook investor. I mean it's a very complicated word that I'm using.

[00:20:44]Why I'm saying this is definitely because it's overcorrected. You will find these bounces and people can step in and step out and make money. You need to be smart. you need to have your book profit and your stop- losses very clearly done. But I see a lot of players are entering it in that manner and they will provide their own buying and selling support as it goes through its cycles. And finally, I will say is that the currency plays a very important part here because while the rupee has recently strengthened thanks to RBI buying, if oil sustains at 92, I don't think that you can expect the rupee to remain at its 95 levels. I think uh we have to be prepared for a late 90s even a hundred uh rupee dollar in about a year's time and if that happens definitely IT companies in rupee EPS are going to get at least a two three 4% uh EPS tailwind because of the currency. So that's another reason to tactically stay invested or buy into it. So there's a whole lot of things that I've said there are pluses and minuses. So just to summarize, I believe that the correction is overdone, but I still don't believe that it is a growth sector on which you can bet on saying that it's going to continue to increase in valuations and earnings. That's not the case. Answer lies somewhere in the middle. Either you are a very tactical player who looks at currency depreciation, looks at valuation, looks at that and steps in and steps back out or you are a long-term value investor who is interested in getting the a decent dividend yield with not too much volatility going forward in that sector then that's your play.

[00:22:17]>> Okay. Got it. Got it. What about banks?

[00:22:20]So because you know we have seen a modest earnings and you it used to be a consensus buy amongst all the you know brokerages but right now in the fourth quarter it's still seen you know the earnings have turned out you know below what the street was expecting. What can FI27 tell us when it comes to the banking sector?

[00:22:39]>> Well I think that the key factor there is the health of the banking sector is in a good shape number one from an NPA perspective. Second aspect is that I expect that the the credit growth has been running three to four percentages points above the deposit growth. So that's been generally perceived as a negative to the banks because cost of borrowing cost of deposits will go up then the net interest margins could get squeezed. But I have a slightly contrary view there. I believe that uh the credit growth is going to go even faster because one of the factors of this oil price rising and the credit the crude related input cost rising is that working capital funding needs of the entire corporate sector is going to go up purely because of a higher raw material cost involved right some of it will go so the working capital financing has to be done from the banking system that's not something that uh gold loan financing or a private sector NBFC can do so banking system will get a higher credit growth continuing and when when corporates have to borrow right I think then they they become less sensitive to interest rates so banks should be able to pass on the interest rate hikes so effectively whether RBI does the rate hike or not in the economy a rate hike is going to happen right so that I view as a generally as a positive especially from a public sector bank or a a private sector bank which has a good corporate book in it right so to me uh and especially with the credit cycle in terms of the cap cycle. Uh if I see that as a picking up story, then I would still back the banking system to be the primary financials to SMMES and MSMES where there's less resistance to interest rates, right? From a perspective of competition, it's only the AAA end of the curve that there'll be a big big maramari to cut down interest rates or whatever and a fight.

[00:24:26]So I still remain uh healthily optimistic as far as the banking and I think that this latest even today's correction or recent pressures have been more due to the RBI policy uncertainty once the RBI policy is behind us and I see that the consumption story will stay which means private sector banks and NBFCs will get good EMI based lending growth happening also I remain uh bullish on the banking space and I view that we have to keep accumulating and on dips right through this period. I'm not somebody who's going to be running afraid of banks just because the RBI policy may turn out to be bad or you know more not what the market expected.

[00:25:09]So I remain I remain reasonably uh what do you say you can say bullish on the medium-term outlook for the banking sector.

[00:25:17]>> Okay, got it. All right, so with that we have to let you go but uh thank you so much for connecting with us and of course appreciate your time.

[00:25:25]Thank