A sell-off that wiped out global stock gains for the year continued in Asia Tuesday amid concerns authorities around the world are struggling to keep the coronavirus from spreading.
Japan opened lower after a holiday, while Australia and South Korea also fell. Futures in Hong Kong pointed to a weaker start. U.S. futures edged higher. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, swung from a fall of 1.8 percent and rose 0.5 percent to 11,881.50 as of 7:27 a.m.
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Here’s a quick look at all that could influence equities today
- U.S. equities tumbled, with the S&P 500 dropping the most since February 2018, as authorities struggled to keep the coronavirus from spreading more widely outside China. All three main U.S. stock benchmarks slumped more than 3 percent. The Dow Jones Industrial Average and S&P erased all of their gains for the year. All 11 sectors of the S&P closed in the red.
- The Stoxx Europe 600 Index slid 3.8 percent on trading volumes well above average for the largest drop since 2016 as investors fled travel and luxury-goods shares. A gauge of credit risk on the region’s high-yield companies jumped.
- The yield on 10-year Treasuries approached the 2016 record low.
- Oil tumbled by the most in almost seven weeks as the worsening coronavirus outbreak fueled concerns that the global economy will falter.
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Earnings Reaction To Watch
Linde India (Q3, FY20)
- Revenue fell 26 percent to Rs 413 crore
- Net profit of Rs 635 crore vs Rs 15.4 crore
- Profit rose due to an exceptional gain of Rs 841 crore
- Exceptional gain on account of sale of an asset on slump basis
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Indian ADRs
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Stocks To Watch
- Tech Mahindra acquired 100 percent stake in Zen3 Infosolution—a U.S.-based company specialising in AI-based solutions.
- JSW Steel Ltd was declared the preferred bidder for the Jajang Iron Ore block in Odisha.
- Suzlon Energy to consider share issue in Feb. 27 meeting.
- HDFC Bank said Managing Director Aditya Puri sold 12.5 lakh shares between Feb 11-12; Puri to sell more equity shares held by him.
- TVS Motor said coronavirus outbreak impacted February production. The company could see a 10 percent drop in its planned February production.
- Camlin Fine Sciences said its China joint venture’s manufacturing facility has resumed operations.
Brokerage Radar
Morgan Stanley on Tech Mahindra
- Maintained ‘Overweight’ with a price target at Rs 865.
- Zen3 acquisition enhances TechM's enterprise application practice and capabilities.
- Zen3 Infosolutions revenue saw a CAGR of 33 percent over 2016-19.
- The current revenue profile implies that the acquisition could add about 1 percent of revenue for Tech Mahindra.
Motilal Oswal on Indian Hotels
- Maintained ‘Buy’ with a price target at Rs 189
- Company appears to be firing well on its 2022 targets.
- Company aims to achieve 400-basis point margin expansion by March.
- Domestic demand has compensated for booking cancellations due to Coronavirus.
- Staying asset light – room addition under management contracts.
- 43 percent managed rooms as of 9MFY20 versus 32 percent as of 2017-18.
- Rebranding of Ginger hotel yielding higher ARRs.
CLSA on Bharti Infratel
- Cut price target to Rs 200 from Rs 230.
- AGR relief pre- requisite for merger.
- A must for Vodafone Idea and imperative to the Indus-Infratel merger.
- Management has cited a potential review of Indus merger.
- Vodafone Idea insolvency would collapse tenancies.
- With AGR risk and a delay in Indus merger, retain our Sell rating.
UBS on RIL
- Maintained ‘Buy’; raised price target to Rs 1,840 from Rs 1,750.
- RIL's efforts to delevrage largely remain unappreciated.
- With organic cash flows co can easily delevrage by March 2023.
- Co could delevrage by 2020-21 end with the conclusion of potential Saudi Aramco deal.
- Moving towards a leaner balance sheet through partnerships and stake sales.
HSBC on SpiceJet
- Upgraded to ‘Buy’; cut price target to Rs 110.50 from 115.
- Challenging liquidity, inefficient cost structure and capacity concerns have kept the stock under pressure
- Stock trading at 2021 EV/EBITDAR of 4.4x, near trough in FY 16-17.
- Have cut earnings forecasts on softness in yields and cost pressure.
UBS on Coal India
- Maintained ‘Buy’ with a price target of Rs 270.
- Volume recovery is here to stay.
- Normalization of supply disruptions at MCL and SECL is driving recovery.
- Coal consumption to remain robust in medium to long term.
- Coal India seems to be pricing in no terminal after 2029-30.
Bulk Deals
- GNA Axles: Promoter Rachhpall Singh sold 1.26 lakh shares (0.6 percent) at Rs 235.17 each.
- Delta Corp: Smaller Cap World Fund Inc sold 17.39 lakh shares (0.6 percent) at Rs 160 each.
The Anup Engineering Ltd
- Abakkus Emerging Opportunities Fund-1 bought 72000 shares (0.7 percent) at Rs 530 each
- Multiples Private Equity Fund sold 57285 shares (0.6 percent) at Rs 530 each
- Multiples Private Equity Fii I sold 1.69 lakh shares (1.7 percent) at Rs 530 each
Who’s Meeting Whom
- Cantabil Retail to meet several fund houses included Barclays, Ambita Capital etc from Feb. 25-27.
- Castrol India to meet FSSA Investment Managers On Feb. 27.
- Sundram Fasteners to meet Spark Capital and Emkay Investment Managers on Feb. 25 & 28 respectively
- eClerx Services to meet Fidelity International on Feb. 25
- Dixon Technologies to meet Antique broking & SAIF Partners on Feb. 26
F&O Cues
Index Futures
- Nifty February futures closed at 11,827.5, discount of 1.8points
- Nifty futures across series open interest up 15 percent, adds 21 lakh shares in open interest
- Nifty Bank February futures closed at 30,423, discount of 32 points
- Nifty Bank futures open interest across series up 13 percent, adds 1.5lakh shares in open interest
- Rollover: Nifty at 35 percent, Nifty Bank 26 percent
Options
- Nifty PCR at 1.10 versus 1.39 (across all series)
Nifty Monthly Expiry: Feb. 27
- Max open interest on call side at 12,000 (47.7 lakh shares)
- Max open interest on put side at 11,800 (30.5 lakh shares)
- Open interest addition seen in 12,000C (+33.7lakh shares), 11,900C (+20lakh shares)
- Open interest shedding seen in 12,000P (-12.8lakh shares)
Stocks In F&O Ban
- In Ban: Yes Bank
F&O Inclusions From Feb. 28
- Info Edge
- HDFC Life
- Bandhan Bank
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