Nifty Hits Record High Of 22,850, Sensex Up 800 Points; Banks & Auto Lead The Gains | CNBC TV18

0.3 to .4% of GDP can help the government trim its deficit or boost spending. How will the government use this money? That remains the big question. Sun Pharma slips after it guides for single digit growth in FY25. Loop in slides on new competition in a key drug, while HEG drops as margins crimp but card and reach shipbuilders and PG Electroplast jump on posting heady growth in sales as well as profits. Infosys CEO Sunil Parikh tells CNBC TV 18 the IT major has moved from proof of concepts to executing AI projects, and six out of eight employees are being trained on an AI in anticipation of its spread. He also points to a pickup in financial services activity even as there is no noticeable rise in discretionary spends and NVIDIA clocks and unimaginable over 600% growth in profits and guides for a stronger quarter ahead than most expected. The $150 billion in 2020 company turned $2.5 trillion enterprise in 2024 has now set its sight on the AI needs of governments as its new growth frontier. Hello and welcome. You've tuned into business launch. I'm Nisha Poddar with me as always is my Co anchor Sonia Shona. Hi Sonia. Its after many days of turbulent market, listless market volatility, today we are seeing a one way rise and whatever record smashing day it has been. And one more thing to really point out is that the FII sell off, that has been one of the concerns for the market. So large part of the momentum has been also driven by our own investors, domestic institutional investors who continued buying despite the volatility. Many factors at play, but election uncertainty is something that was really bothering the market. So today's momentum is clearly important. Over 1% up on Nifty as well as Sensex. At the moment Nifty is gaining over 230 points above 22,830 levels. Bank Nifty and the Banks, Financials, blue chip banks are the ones which are really driving the growth outperforming the key indices. 1.7% up in trade and mid caps are slightly underperforming to the key indices but there is a good showing of closer to half a percent of gain and that is also seen in the advanced decline ratio which is slightly in favour of the advances there. No point talking about the individual names except for some of the ones which are pressured because of news development, especially the high beta metal stocks, they are not doing that well. And Sun Pharma because of a weaker guide in Sonia. Absolutely. I mean, what a day today, right? And you know the record high assumes even more importance today because of the kind of rally we've seen in the month of May. So if you just pull up a one month chart, right, you'll notice that from the lows in May, somewhere around the 9th, 10th of May that we hit that low, the market has rallied. There you have it. The market has rallied 830 points just from the lows of May. So it's been one hell of a ride this month. Very, very volatile. But the important bit is that this is an out and out bull market. This is a market where every dips, every dip is getting bought. Most global and local investors are bullish on India, give and take. Of course, a lot of the election volatility, but most experts are also waiting for the event to move out of the way before the next leg of an UP move. So very, very good day for the market so far. And of course, the RBI dividend was the cherry on the cake today. So that was the big positive as well. But let's talk about that. The RBI has announced a record annual dividend of 2.11 lakh crores for the government. This is a bonanza for the government which had budgeted just over 1,00,000 crores and the payout is double of that amount. This dividend is nearly three times higher than the 87,000 crore rupee payout in FY23. In a conversation with CNBC TV 18, Finance Secretary TV Somanathan comments that the RBIs dividend will prove to be beneficial for the government and will pragmatically take future steps with regards to the fiscal policy. Listening cash is a short term thing. The revenue is important. Cash will fluctuate based on expected. Cash is not something which can be managed or I can't tell you how cash will be managed but I can tell you that this dividend is good for the revenue of the government, its good for the fiscal position of the government, its always good. All revenues welcome. Alright, record dividend by the Reserve Bank of India, one of the key factors today. Let's also listen in to some of the opinion that's coming in from a host of experts on this record dividend from the RBI and what does it really mean for liquidity for the July budget math and more on that. Listen in to some key opinions. The immediate impact with respect to market liquidity is, of course, nothing. This is going to come with a lag and the amount that is done. I mean, look, you can think of the budget both in terms of cash accounting as well as accrual accounting. So it doesn't really matter whether it falls under the 2425 budget or the 2324 budget. If we were going to have shortfalls in other sorts of revenue, this certainly acts as a balancing factor. So therefore it's a piece of good news as far as the fixed income market it is concerned when we are looking at from the supply of bond perspective. So from what I'd like to see, you know, as a former, I'm a fiscal economist, of course, I would like this surprise addition from the dividend to be used as a saving tool as opposed to accommodating expenditure. We were putting out in our notes saying that there is a possibility that the RBA dividend will be significantly higher than what the government has budgeted for, and that way it's not that big a surprise for us. Yes, it means that the government has three options in some sense. One is that it can reduce the fiscal deficit 0.3% of GDP. As you mentioned what the initial thought process was that the government will do only somewhat marginal tweak to the interim budget numbers because the interim budget itself was quite detailed. Now with this one, more than 1,00,000 crore extra Kitty, the budget maths will have to be reworked and it will become very interesting and the market will keep on speculating until it's actually announced. It's a substantial fiscal bonanza that has come in. We think the government could therefore choose to reduce the deficit marginally when it presents the final budget in, you know, early July, which is what we're expecting, but also leave some cushion for any unexpected shifts that might happen on the revenue and the expenditure side. So this is actually going to add to the cash surplus that the government is sitting on. This is, I mean, this could very well go, you know, above 5 trillion INR and therefore some sort of a reduction in the borrowing, you know, could happen. Again, the details of this are likely to get announced in the budget. And as Shamaran was saying, it's really positive from a demand supply environment. So our own forecast is that the seven-year as well as the 10 year bond yields could drop to 6.75%. OK, well that's the big macro development. But pharmaceutical major Sun Pharma is the top nifty loser after the companies revenues came in below estimates. The US sales also mistreat expectations. However, the margins came in better than expected. The Group CFO, CS Murali Dharan spoke to CNBC TV 18 about the companies guidance for FY25 and the steady increase in R&D spends. Let's listen in to excerpts of that conversation. So our revenue guidance of high single digit growth of FI 25 is based on all the businesses which are poised for growth. As far as the the IBERDA margin guidance, we have not been given guidance on IBERDA for last couple of years at this point of time. See our guidance for FI 25 on the revenue side factors in all the known factors on the business related growth positions. With regard to the R&D spend, you will observe that it has been steadily increasing through the year supported by incremental speciality R&D spend. In the current year, you have seen that FI 24 overall R&D spend is about $380 million plus substantial increase from 26% to 39%. Overall increases happened with specialty R&D. In future, we, we are expected to start more trials as a pipeline and major part of R&D increase will be towards the speciality and that's one of the factors why we are given the guidance of R&D spend between 8 to 10% of the revenue for FY25. As we mentioned yesterday's call also we believe that these are some site specific issues. We are working to address them in due course. After we have completed the entire remediation work, the facilities will be presented to the MDA for the inspection. That's what I said that we, we once we complete all the remediation work which is ongoing, we will definitely invite FDA for the inspection of these sites. Alright, so that was from Sun Pharma and actually the pharmaceutical space is in news today. But before that an important news flash on your screen and that has impacted geofinancial services talk as well. It has seen a sudden upward spike. So keep an eye out on that. They seek shareholders nod for foreign investments up to 49% of equity and important piece of development there. And of course the shareholders nod will be required. The stock is up closer to 5% in trade at the moment. Now we have some news flow also which could be negative for two pharma companies, Lupin as well as Cipla as there is competitor for some of the drugs. Vivek has more details on that on how these two companies could be negatively impacted. Tell us, well, good afternoon. You know, so two companies that we are tracking, number one is Lupin and the other one is supply. So what's actually happened overnight is that as far as one very key drug is concerned, US based company Amphistar Pharmaceuticals has received the US FDA approval for albuterol sulphate inhalation aerosol mainly used for any kind of worry to the patient may have in terms of respiratory disorders. Now this is a negative read through as far as Lupin as well as supply is concerned. Remember Albatrol is actually the second largest revenue contributor to Lupin as well as Cipla's US revenue base. And what most of the analysts you know as well as what Citi is saying is that the new player that comes in while number one will take away market share from the incumbents. There is also the worry that the new player will resort to significant price erosion or significant price cuts to the tune of almost 15 to 20%. And this is something that the street is worried about. In fact, what city says is that albuterol etc. And the product is one of the top products for the companies US basket for both Lupin as well as SIPLA Lupin is slightly more impacted and incremental competition may have some negative impact on the back of that Lupin under significant pressure. So plus still holding out. OK, thanks a lot for that. Well, on to a CNBC TV and exclusive. Now Infosys is working on 200 generative AI projects as the MD and CEO Salil Parekh adds that the IT majors looking at acquisitions in SAS and maintains FI 25 constant currency revenue growth guidance at 1 to 3%. Listen, it working today on 200 projects, but as we go through as the economic environment changes, we see more and more of this coming to organizations as the economic environment changes, both for cost efficiency but also for customer connect growth, generative AI is going to be more and more spreading in large organizations. You know, six out of eight employees at Infosys are getting trained on generative AI and artificial intelligence technologies in different levels because there are a large number of these new models and there's different ways to work on it. What we are seeing, we were a few quarters ago doing things which were more like proof of concepts. Today, these are actual projects with clients where they're seeing the benefit and that's a huge change. And we see every client discussion a combination of that. The discretionary spend, we've not seen a change at the end of Q4 or at the start of Q1. So we will wait and see how that plays out. And based on that, we will see what what the environment for recruiting is and what the environment in the future is for digital transformation. Generally, the discretionary spends approach looks similar at the end of Q4, start of Q1, we would also send on financial services. We see a little bit more activity than we had seen in Q4. We are looking more in spaces which are related to that. So for example, we look at engineering services, we look at some other SAS areas. We look at geographies as well. There are various geographies around the world which are doing well and we are looking at those as a expanding footprint. A very clear with the guidance was 1% to 3% on a constant currency basis. The growth we will of course relocate the guidance at at the quarterlies at the at the end of it. So we will come to it in in a few weeks. But at this stage we confirm the guidance at 1 to 3%. What gives us comfort for the one to 3% guidance really is one the large deals which was really exceptional. So that gives us a foundation. Second, we see the discretionary spend has remained about the same which is not become worse which gives us some comfort. Its not changed to positive, but its the same level at the end of Q4, start of Q1. All right, some very important comments coming in from Infosys and the race for the tech companies will be to capture the AI market. With that we will slip into a short reader on business launch. But when we return, we get you all the highlights from Nvidia's fantastic first quarter quarter earnings. Stay tuned for all the details. Welcome back. Still a very, very good looking screen. Just look at that, 213 points higher. There's no stopping this rally right now. And the best part is its across the board. The banks are participating. The Bank Nifty in fact, is up 700 points as we speak. And the Sensex is just, you know, distance kissing distance away from that record high. But to some important opinion now, JP Morgan Chase CEO Jamie Dimon sees huge opportunities in markets like India, Japan and Singapore and adds that he continues to remain cautious about the Fed, the impact on equities and more. He spoke to CNBC on the sidelines of the JP Morgan Global China Summit. Listen it. So 40% of our Asia businesses, China and Hong Kong, that means 60% is not huge opportunities in India, huge opportunity in Japan, Singapore, you know, Southeast Asia, etcetera. We've been in most of those countries for 75 hundred, 125 years. We've been in Asia 450 years. So you know, to me the way and each country is different. So I never I really don't like to Asia is one. They have different laws, different customs requirements, different trade, different needs. So we just keep on investing in each one. But those opportunities can be big for a very long time period and Asia will be growing faster than the rest of the world. So you know, that is still true. It was true before, it's still true today. We when we look at risk and rates, we don't always look at guessing what the future is kind of look in the range of outcomes. You know, do I think the rates can go up a little bit? Yes, I do. And if they do, is the world prepared for it and not really OK, so or so I think it could inflation be stickier than people think. I think the odds are higher than other people think, mostly because the huge amount of fiscal monetary stimulus is still in the system and it still may be driving some of this liquidity. You see markets going up, you know prices of certain assets, stuff like that. So I'm just in the cautious side now. Again, I'm usually cautious, so maybe that's my normal state of affairs, but put me in the cautious side in this one. The world said I was going to stay at 2% all that time. Then they said it's going to 6%, then they said it's going to go to four. It's been 100% wrong almost every single time. Why do you think this time it's right? So I'm, I look at the range of outcomes and again, the worst outcome for all of us is what I call stagflation, higher rates and recession. You know, that means corporate profits will go down and we'll get through all of that. I mean, the world will survive that, but I just think the odds a little bit higher than other people think. Alright, some important global development then in the global markets, NASDAQ and S&P 500 futures climbed after AI favorite NVIDIA reported a blowout first quarter earnings and the companies first quarter revenue rose 268%, while the profit surged over 620%. In fact, Rima Tendulkar is right here to give us a quick round up of those numbers and the stock move and the surge in the companies market cap over the years and more. Tell us remark. Thanks so much for that. So AI tech giant NVIDIA has reported a blowout quarter, cementing its place as a tech powerhouse and a leader of the AI chip revolution. And these are the numbers. Record revenues, record profits. Revenues have gone up by 268%. Urania and profits have gone up 628%, surpassing lofty estimates and with this kind of a performance yesterday, the stock surged 6% in after hours trading to cross the $1000 mark, taking its market capitalization to 2 1/2 trillion dollar. In fact, the market capitalization of NVIDIA has surged 4X since January of 2023. And if you go back in time, its market capitalization was a mere one, $50 billion in January of 2020 and now we are talking about 2 1/2 trillion dollars. This is absolutely nothing short of stunning and miraculous. And with this swelling of the market capitalization, NVIDIA is now the third most valuable publicly traded company in the United States after Microsoft and Apple. And to give you another stunning, stunning statistic, NVIDIA market capitalization, if you consider the after hour close rise, the market cap of 2 1/2 trillion dollars, it's more than that of Tesla and Amazon combined. You know what's driving it up are real hard numbers. First on this quarters performance, right? Revenues up 18% quarter on quarter. Profits are up close to about two 60%. It's three-year revenue compounded annual growth rate. The revenue, three-year revenue CAGR has accelerated to 66%. Its gross margins are 78%. Its operating margins are 65%. And look at the way the EPS of this company has exploded. It was a mere $1.00 odd in the preceding quarters and this quarter it shot up to six stock split of tennis to one. And to top it all up, its Q2 guidance has also topped lofty estimates at $28 billion. So it's no wonder it doesn't come as a surprise that 90%. 90% of the analysts who track NVIDIA have a buy call on it, and the highest target price is at $1350 by HSBC. And here's something interesting which came out of the earnings call yesterday. The companies told the analysts about a new area that's rapidly growing, sovereign AI, which basically means that many nations around the world are building up their own domestic computing capacity as data privacy concerns come into focus. And this is driving increasing demand for Nvidia's products. So Sovereign AI is now emerging as a growth driver for the company and this is what we shared as an example by the CFO in yesterday's call. They said swiss.com which is majority owned by the Swiss government has recently announced that its Italian subsidiary will build Italies first and most powerful NVIDIA powered supercomputer to develop the first LLM large language model natively trained in the Italian language. So the importance of AI has got the attention of every nation and from nothing in the previous squad year, a sovereign AI, they believe the revenues from sovereign AI can approach high single digit billions this year. Back to you. OK, thanks a lot for that. Well, that's the move on NVIDIA. Remarkable really the kind of performance that this company has seen over the last many quarters. But more news and updates to follow on the other side of the break. So do stay tuned in, welcome back, you are watching business launch, a quick look at the market, what a record-breaking date has been and the momentum really carries on Nifty 50 at this point 22,855 odd levels over 1% comfortably and rising high. Two of the big heavyweights are continuing their momentum and contribution to Nifty 50 Reliance Industries as well as HDFC Bank. Those two heavyweights are at their peak on the at the peak of their trading day-to-day. So keep an eye out on that and Bank Nifty also doing very well. So Sonia, it's a good day of trade today. And absolutely, I mean, there's no questions about that, right? 75,000 on the Sensex for the first time ever, big, big milestones getting hit and in 800 point rallies, what you're seeing right now. No complaints at all, Nisha. So it's a great afternoon on the last week, but that's all the time we have on business lunch. Thanks a lot for watching with Cap Radar comes up next.