Asian stocks resumed declines and U.S. equity futures edged lower amid ongoing efforts to control the widening coronavirus outbreak.
Modest risk aversion returned to markets Thursday as Japanese stocks opened lower along with those in South Korea and Australia. Thursday is the final day of trading for mainland Chinese equities before the weeklong Lunar New Year holiday.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded little changed at 12,139 as of 6:58 a.m.
Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell.
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Here’s a quick look at all that could influence equities today.
- The S&P 500 Index ended the day up less than 0.1 percent, lifted by gains in technology shares and positive earnings reports but was held back by the concern of China's outbreak.
- Oil declined to a seven-week low on concerns that a deadly virus that’s spreading from China will crimp energy demand in a market already awash with supplies.
Get your daily fix of global markets here.
Earnings Reaction To Watch
L&T (Q3, YoY)
- Revenue rose 6 percent to Rs 36,243 crore. (Estimate: Rs 39,301 crore)
- Net profit rose 15 percent to Rs 2,352 crore. (Estimate: Rs 2400 crore)
- EBITDA rose 10 percent to Rs 4,118 crore. (Estimate: Rs 439 crore)
- Margin stood at 11.4 percent versus 10.9 percent. (Estimate: 11.2 percent)
Axis Bank (Q3, YoY)
- Net Interest Income rose 15 percent to Rs 6,453 crore. (Estimate: Rs 6,348 crore)
- Net profit rose 5 percent to Rs 1,757 crore. (Estimate: Rs 2,139 crore)
- Provisions were at Rs 3,470.9 crore versus Rs 3,054.5 crore. (Rs 3,518.4 crore QoQ)
- GNPA at 5.00 percent versus 5.03 percent. (QoQ)
- NNPA at 2.09 percent versus 1.99 percent. (QoQ)
Raymond (Q3, YoY)
- Revenue rose 12.5 percent to Rs 1,885.4 crore.
- Net profit rose 5.2 times to Rs 195.3 crore.
- Net profit (ex-Thane Land Sale) fell 4 percent to Rs 36 crore.
- EBITDA rose 33.4 percent to Rs 206.2 crore.
- Margin stood at 10.9 percent versus 9.2 percent.
RBL Bank (Q3, YoY)
- Net Interest Income rose 41 percent to Rs 923 crore. (Estimate: Rs 902 crore)
- Net profit fell 69 percent to Rs 69.9 crore. (Estimate: Rs 86.4 crore)
- Provisions at Rs 638.29 crore. (Rs 533 crore QoQ)
- GNPA at 3.33 percent versus 2.60 percent.
- NNPA at 2.07 percent versus 1.56 percent.
CEAT (Q3, YoY)
- Revenue rose 1.8 percent to Rs 1,761.8 crore.
- Net profit was flat at Rs 52.8 crore.
- EBITDA rose 28.5 percent at Rs 183.2 crore.
- Margin stood at 10.4 percent versus 8.2 percent.
CreditAccess Grameen (Q3, YoY)
- Net Interest Income rose 35.1 percent to Rs 266.3 crore.
- Net profit rose 8.3 percent to Rs 108 crore.
- Disbursements rose 69 percent to Rs 2977 crore.
- GNPA at 0.85 percent versus 0.52 percent (QoQ).
- Gross Loan Portfolio rose 46 percent to Rs 8,872 crore.
Ujjivan Small Finance Bank (Q3, YoY)
- Net Interest Income rose 52.1 percent to Rs 426.5 crore.
- Net profit rose 98 percent to Rs 89.7 crore.
- Provisions were at Rs 30.5 crore versus Rs 7 crore. (Rs 24.8cr QoQ)
- GNPA at 0.95 percent versus 0.85 percent (QoQ).
- NNPA at 0.38 percent versus 0.33 percent (QoQ).
Syngene International (Q3, YoY)
- Revenue rose 11.1 percent to Rs 519.1 crore.
- Net profit rose 5.5 percent to Rs 91.8 crore.
- EBITDA rose 2.4 percent to Rs 143.5 crore.
- Margin stood at 27.6 percent versus 30 percent.
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Earnings To Watch
- HDFC Life Insurance
- Reliance Nippon Life Asset Management
- Biocon
- PNB Housing Finance
- PVR
- Radico KhaitanWestlife Development
- Canara Bank
- Central Depository Services
- Cholamandalam Investment and Finance
- HT Media
- Indoco Remedies
- D B Corp
- GHCL
- GMM Pfaudler
- Gujarat Intrux
- Apar Industries
- Automotive Stampings and Assemblies
- JK Agri Genetics
- JM Financial
- Kokuyo Camlin
- Kirloskar Pneumatic
- NELCO
- Pioneer Distilleries
- Rane Brake Lining
- Zee Media Corporation
- Zensar Technologies
- Dishman Carbogen Amcis
- Indiabulls Ventures
- Oriental Bank of Commerce
- Kirloskar Pneumatic
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Indian ADRs
X
Stocks To Watch
- Adani Group Stocks: Adani Group plans to expand its renewable power capacity to 18 gigawatts by 2025 from over 2.5 GW now, Chairman Gautam Adani said. The group is developing the Carmichael coal project in Australia, will add 2.9 GW of renewable power capacity in 2020 and plans to expand its 1.3 GW solar cell and module manufacturing facility in Mundra in India to 3.5 GW.
- Piramal Enterprises: Rights Issue was oversubscribed 1.14 times. Rights Issue closed on Jan. 21
- Oil India moves Supreme court on AGR verdict. The company had received a demand for Rs 48,000 crore Telecom adjusted gross revenue dues and has taken the matter with Telecom and Oil Ministries.
- Tata Motors: Jaguar Land Rover cut 500 jobs or about 10 percent of the workforce at its Halewood Plant in England.
- Asian Paints: Board approved the merger of its wholly-owned arm Reno Chemicals Pharma & Cosmetics with the company.
- Vodafone Idea, Tata Telecommunications seek an exception from Government to miss Jan. 23 deadline for dues.
- Cabinet approved the closure of Hindustan Fluorocarbons.
- UPL confirmed the news of the income tax departments searching their office premises and the company said that it is committed to fully cooperate with authorities in the ongoing research.
- IL&FS Transportation Networks unit entered into an agreement with MoRTH and project lenders for foreclosure of Beawar-Gomti Road Concession Agreement. The afore-said unit will receive Rs 144.08 crore from MoRTH after handing the toll operations.
- Syngene International: Current whole-time director and Chief Executive Officer Jonathan Hunt to assume the role of CEO and managing director, while Kiran Mazumdar Shaw to become non-executive chairperson with effect from April 1.
- CreditAccess Grameen: revised its exchange ratio to 157 shares of the company for every 100 shares of Madura Micro Finance. The company will acquire 54.92 lakh shares (76.34 percent) in Madura Micro Finance at Rs 1,208 per share, aggregating to Rs 869 crore.
- Indian Oil Corporation will boost use of Ennore LNG Terminal from Mid-2021, according to Bloomberg report.
- Future Retail raised $500 million by allotment of senior secured notes.
- MRF partially commissioned Phase 1 of its greenfield unit in Gujarat.
- ITI: Board approved price band of Rs 72-77 for further public issue of rose to 18.18 crore shares. The floor price is at a discount of 28 percent to yesterday’s closing price. Minimum bid lot was at 150 shares.
- Datamatics Global Services said that deal to sell stake in its arm Cignex Datamatics to Singapore based Relevance Lab has not been completed as shareholders did not approve the proposed resolution. Both parties are reworking on the revised structure for the agreement.
- Jindal Drilling & Industries said that its rig has commenced operation from Jan. 21 under the contract awarded by Oil & Natural Gas Corporation.
- Karnataka Bank to consider various options for capital augmentation on Jan. 27.
- Ashiana Housing said that it has obtained Real Estate (Regulation and Development) Act registration for its project in Jaipur. Project is set to be launched for booking from March 12.
Brokerage Radar
On Axis Bank
HSBC
- Maintained ‘Buy’ with a price target of Rs 930.
- December quarter review: Slippages at elevated level, but arise mostly from “BB & below rated” assets.
- Progress on seen on assets, liability franchise and net interest margins.
- Consistency in delivery should now drive rerating; progress on business turnaround is visible.
UBS
- Maintained ‘Buy’ with a price target of Rs 970.
- Operating trends weak; NPL formation remains high.
- Core pre-provisioning operating profit growth remained stable; fee growth was weaker.
- Prefer Axis among banks for its strong retail franchise and inexpensive valuations.
Morgan Stanley
- Maintained ‘Overweight’ with a price target of Rs 925.
- Core profit missed estimates due to slower asset growth, slower fees and one-off costs.
- Impaired loan formation was elevated, owing to corporate loans.
- Asset quality outlook is improving with better recognition and market share gain continues.
On Asian Paints
UBS
- Maintained ‘Buy’ with a price target of Rs 2,120.
- Grows decorative volumes by 10-11 percent in Q3FY20.
- Margin beat helps meet profit estimates.
- Growth in rural portfolio- a green shoot or replacement demand.
HSBC
- Maintained ‘Buy’; cut price target to Rs 2,000 from Rs 2,060.
- Delivers low double-digit volume growth defying slowdown.
- Volume growth aided by deliberate push on the economy products.
- Revenue growth lacklustre, but still manages to deliver margin expansion.
- Strategy is sensible and revenue growth too will accelerate as demand recovers.
Prabhudas Lilladher
- Maintained ‘Accumulate’; cut price target to Rs 1,815 from Rs 1,822.
- Reported 8th consecutive quarter of double-digit volume growth.
- Success in new entry-level paints at 15-20 percent lower prices drive volumes.
- Another 0.25 percent price cut; total 1 percent cut in 2019-20, mainly in solvent-based paints.
On L&T
Nomura
- Maintained ‘Buy’ with a price target of Rs 1,715.
- December quarter’s core revenue weakens on execution headwinds.
- Order inflows remain robust; stable working capital levels lead to strong cash generation.
- Improvement in core Ebitda margin a key positive.
Morgan Stanley
- Maintained ‘Overweight’; cut price target to Rs 1,556 from Rs 1,753.
- Q3 was below expectations, but expect a stronger the fourth quarter.
- Execution and liquidity-related challenges in some states affected revenue growth.
- Execution challenges are receding, cash flows should seasonally improve in the fourth quarter.
- Domestic prospect list is strong and E&A deal is likely to close shortly.
UBS
- Maintained ‘Buy’ with a price target of Rs 1,600.
- December quarter’s performance reflective of resilience of the business model.
- Despite Q3 print, management maintained revenue and order inflow guidance.
- Domestic awarding outlook reasonable in light of L&T’s ask
More Calls
Nomura on Ceat
- Maintained ‘Reduce’ with a price target of Rs 856
- Benign commodity prices benefit Ebitda.
- Revenue grew in challenging enviornment, benefitting from higher exposure to two-wheeler/passenger vehicle segments.
- Expect Ceat to benefit from relatively higher exposure to the two-wheeler/passenger vehicle segments.
Investec on RBL Bank
- Maintained ‘Buy’ with a price target of Rs 480.
- Slippages and stress pool reduction in line; sub-Investment book remains elevated.
- Core operating performance strong led by Credit cards and MFI.
- Deposits momentum weaker than expected.
Pledge Share Details
- Future Retail promoter Future Corporate Resources revoked pledge of 11.5 lakh shares on Jan. 21.
Trading Tweaks
- Aster DM Healthcare ex-date for share-buyback.
- Arihant Superstructures, Windsor Machines, GTN Industries to move into ASM Framework.
- Greenpanel Industries, Prakash Steelage, Williamson Magor to move into short term ASM Framework.
- Bharat Road Network, N R Agarwal Industries, Patel Engineering to move out of short term ASM Framework.
- Spencers Retail price band revised to 10 percent.
- Manugraph, BSL price band revised to 5 percent.
Who’s Meeting Whom
- Speciality Restaurants to meet Northbound Investment on Jan. 23.
Money Market Update
- The rupee closed at 71.20/$ versus 71.21/$ on Tuesday.
F&O Cues
Index Futures
- Nifty January futures closed at 12,145, premium of 38 points versus 33.3 points.
- Nifty January futures open interest down 1 percent, sheds 1.3 lakh shares in open interest.
- Nifty Bank January futures closed at 30,802.8, premium of 101.4 points versus 95.3 points.
- Nifty Bank January futures open interest up 8.8 percent, adds 1.2 lakh shares in open interest.
Options
- Nifty PCR at 1.00 versus 1.07 (across all series).
Nifty Weekly Expiry: Jan. 23
- Max open interest on call side at 12,200 (28.8 lakh shares).
- Max open interest on put side at 12,000 (15.2 lakh shares).
- Open interest addition seen at 12,150C (+14.9 lakh shares), 12,200C (+10.5 lakh shares), 12,100C (+10.3 lakh shares).
- Open interest shedding seen at 12,200P (-3.3 lakh shares), 12,300P (-2.4 lakh shares).
Nifty Monthly Expiry: Jan. 30
- Max open interest on call side at 12,500 (34.4 lakh shares).
- Max open interest on put side at 12,000 (35.5 lakh shares).
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