Hello and welcome to Let's talk business. I'm Franci Sherman. Let's start with the updates from the the street. While nifty and sex ended the day in red after a choppy trade Today, sectors like tech banks dragged the index the most. Primes Hi is here with the market action markets actually snapped the three day winning streak in today's session. And as we know, it was weekly expiry as well. So the volatility was pretty high. Uh, n ended below the 80,700 whereas the Cenex fell almost a little over 300 points in today's session. It was mainly the financials, which were a track, however, an interesting move that we this with regards to the pharma majors, specifically, the hospital counters as well. So the likes of for a polo some smart moves coming in there, uh, on the back of the broker, not with these names moving on if you see in terms of the broader markets clearly what the mid cap index that saw gains of around 3/10 of a percent, whereas the small cap index ended pretty much flat. In fact, clearly the bank actually underperformed the benchmark indices in trade today. Uh, the other side of the opinion that this consolidation is something that will continue. There is good amount of resistance that the markets have been facing. And there is an absolute expect, you know, possibility. I would say that we would not probably see life file levels in terms of 50 50 in the current expiry. That's what one of the analysts that I was talking to indicated as well. Let's quickly look at the top gainers Apollo hospitals, Devi Laboratories, D R L s as well as B p CD for the top gainers in trade today, whereas on the losing end, you are a hero Moto Indecent Whip Pro P I as well as, uh, talking about the newsmakers you have backing. And B h e l who signed a 24,000 karu contracts about these counters were in, uh, focus. G r infra projects was in focus on the back of an auto win. Uh, apart from that potentially BC l India as well as a W l were in focus because the Ministry of Food and Public Distribution have said that the consumers will pay 5% less for edible oils, coach and shipyard again on the back of an order. So good moves Proper Properties has announced an acquisition of land parcels for a luxury project in Kolkata. Saw some good moves. S G. We are on the back of an energy deal actually jumped to a six month high as well as foreign beverages. Uh, so smart gains as it was a record day of on terms of the face value split as well. So overall a lot of movers and shakers and trade today. But the consolidation in markets is something that the street is watching out for back to you. Meanwhile, the US Federal Reserve left interest rates unchanged. It maintained a hawkish stance and signalled that it could go for at least two more interest rate hikes this year. Remember, the central bank's decision to hold rates steady in the month of June ends a round of 10 straight hikes undertaken to combat mounting inflation. Meanwhile, the Fed chairman, in his briefing emphasised that the inflation still remains elevated, reiterating the inflation target at 2% the committee has consistently said and believed that the process of getting inflation down is going to be a gradual one. It's going to take some time. And, uh, I think you go back to the to the three part framework for core P CE inflation, which is we think of as good an indicator as you can have for where inflation is going forward. You start with goods with goods we need to see continued, uh, healing and supply conditions, supply side conditions. They've definitely improved a substantial amount. But if you talk to people in business, they will say it's not back to where it was. So that's that's one thing. And that should enable goods prices to continue because good inflation to continue to come down over time in terms of housing services, inflation. That's another big piece. And and you are seeing there that new rents, new leases are coming in at levels, and it's really a matter of time as that goes through the pipeline. In fact, I think any forecast that people are making right now about inflation coming down this year will will will contain a big dose of this year or next year will contain a good amount of of, uh, disinflation from that source, and and that's again probably going to come slower than we would expect. That leaves, you know, the big sector, which is a little more than half. Pardon me of the core PC inflation. That's not housing services. And you know, we see only the earliest signs of disinflation there. It's a sector. It's a very broad and diverse sector. I would say in a number of the parts of that sector, the largest cost would be wage costs. It's the service sector. So it's it's heavily labour intensive. And I think many analysts would say that the key to getting inflation down there is to have a continuing loosening in labour market conditions. So with the Federal Reserve pausing the interest rate hikes, Bank of America's Izumi Devali says that there might be further hikes if the data for inflation and the labour market comes in hot. Remember, inflation is still around 4% above the Federal Reserve's 2% target. While speaking to Q Prime, an economist added that the Fed might be satisfied with the current interest rates, but it has to be more watchful of inflation. I do think that going forward they are truly data dependent, so if the labour market and inflation data continue to come in hot. We think that further hikes will be delivered. Our base case is to more hikes in July and September. However, if we do see some further improvement and softening in the labour market and inflation comes down faster than we expect, we think that you know, they'll just pause here for the time being. One of the very important missions that chair Powell and the Fed wanted to accomplish in this meeting is to deliver the pause without having markets, you know, price in rate cuts. I think the Fed is fairly satisfied with where interest rates stand right now and the level of tightening that is being delivered through policy. However, you know we still have inflation above target, so there still needs to be some work done to bring demand and inflation down. So what the Fed does not want to see is for the markets to price in premature cuts. For that to lead to a loosening of financial conditions which may lead to a re acceleration in the US economy, and meanwhile, B f SI and Capex plays will drive earnings growth going forward. That's what Nin Shabba of Motilal o private wealth, says while speaking to B. Q Prime's leader, Sha Sha predicts that the automobile sector will play an important role as the growth potential remains intact. At the end of f I 18, if you look at the nifty pool of banking stocks, the the profit pool was around 45,000 Growers. Uh, today at the end of f I 23 it's it's grown up five times, so 55 s in five years, it's gone. Gone to about 2.1. Lac grows every cycle. As you rightly mentioned, age has a different set of winners. So maybe the sectors remain the same. At least two of the sectors we believe can continue to drive. Uh, you know, that, uh, trajectory, uh, commodities is is way too cyclical to call, you know, And, uh, you know, we've seen a lot of cyclicality even in over the last few years. F Y 20 You saw commodities f Y 21. Uh, there was a big rally. And then there was a drop. Uh, you know, post that, uh, so very difficult to take a call on commodities, But I would certainly, um, assume that banking for sure. K PE more driven by P l. I, uh, we haven't seen broad broad based private K yet in terms of Greenfield projects, but at least whatever has been decided through the p l I is certainly happening. Uh, so, actually, from a Capex perspective, you know, all the three, uh, aspects of Capex are actually coming together right now, which is your public apex driven by the government. You have private, which is companies. And then you have, uh, household K, which is really real estate. So these three are are coming together in the right kind of frame. So I do tend to believe that they will lead the pack of earnings going forward, obviously along with b f SI. And I think the other sector which could do fairly well, could be auto. Auto is also coming off a five year trend of downgrades in terms of earnings. So 5 23 really saw a massive upturn. In fact, uh, if you see calendar year ti date from amongst the top performing stocks, Uh, at least, uh, 3 to 4 names are within the, uh, within the auto sector. So I do think auto should play a reasonable role, at least over the next couple of years. Yeah. And the other other fact, Mira, is that, you know, uh, balance sheets have got, uh, deleveraged over the last, uh, 56 years. If you see the net leverage. If we do this at a top 500 company level has come down to 0.5. Which means that, uh, you know, the private Capex. There is a lot of capacity for companies to do. Do Capex and bank balance Banks are also, uh, really eager to lend again. That's all we have for you in this segment of Let's talk business. Thanks very much for watching.
