Panic gripped Asian markets after a positive open on Tuesday morning after senior White House official Peter Navarro's comments on the U.S.-China trade deal.
In an interview to Fox News, Navarro suggested that the deal was 'over' without specifics, triggering a sell-off in Asian markets, U.S. Futures and crude oil.
Futures recovered again after Navarro stated that his remarks were taken out of context.
The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, gained 0.3% to 10,358 as of 8:20 a.m. after falling to the day’s low of 10,226.
Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell.
Let’s take a look at all that can influence equities in today’s trading session:
- Markets in Japan, Australia and South Korea have opened higher while futures in Hong Kong point to a positive start.
- Futures on the Dow Jones are edging higher by 80 points after the benchmark advanced 0.6% on Monday.
- The Nasdaq composite gained for the seventh straight day on Monday - its longest rally of the year.
- Steve Schwarzman, CEO of Blackstone said that the economy may benefit from a V-type recovery but getting back to levels of 2019 will take 'quite a while.'
- MSCI to announce its market classification review for 2020 today.
- Yield on the 10-year treasury stood at 0.71%.
- West Texas Intermediate crude was little changed at $40.78 per barrel.
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Stocks To Watch
- Info Edge: To raise Rs 1,875 crore through issue of equity shares of face of Rs 10 via a Qualified Institutions Placement (QIP).
- Fitch Ratings: Revises outlook on long-term issuer default ratings of Indian Oil, BPCL, Oil India, GAIL, Power Grid and NTPC to negative from stable. The long-term Issuer Default Rating is re-affirmed at BBB- for all the companies.
- Alkem Laboratories: Board approved closure of operations at its manufacturing facility at the Betalactum block in Daman. The facility contributed 0.8% of the total turnover and mainly catered to the international market and was significantly under-utilized.
- HDFC AMC: Says it is now compliant with minimum public shareholding norms as per SEBI, after the stake sale through an OFS by Standard Life Investments. Promoters currently hold 73.97% stake in the company.
- JTEKT: To introduce constant velocity joint product in Driveline segment.
- 8K Miles Software Services: Launched technology and consultancy services to providers, payers and life science companies across North America.
- Satin Creditcare Network: Approved raising Rs 120 crore via rights issue.
- UTI AMC: Received SEBI nod for Rs 3,000 crore IPO.
- Omaxe: To consider raising funds on June 29.
- Aditya Birla Fashion and Retail: To consider terms of proposed rights issue of Rs 1,000 crore on June 25.
- PNC Infratech: Will not extend share purchase agreement with Cube Highways for 35% stake sale of their venture of the four-laning toll project in Uttar Pradesh.
- Tejas Networks: ICRA has downgraded the long-term rating from ICRA A to ICRA A- and the short-term rating from ICRA A1 to ICRA A2+, for line of credit worth Rs 559.9 crore. The outlook on the long-term rating is stable.
- Non-Nifty Earnings Today: Page Industries, Berger Paints, Alkyl Amines, Aster DM Healthcare, Balrampur Chini, Bank of Baroda, DB Corp, Finolex Industries, GM Breweries, Hatsun Agro, Kolte-Patil, Indian Bank, Phillips Carbon Black.
Earnings Reported After Market Hours
Sudarshan Chemicals Q4FY20
- Revenue up 4.5% to Rs 449.1 crore
- Net profit up 5.8% to Rs 27.3 crore
- Ebitda down 17.6% to Rs 53.9 crore
- Ebitda margin down to 12% from 15.2%
- Higher other expenses impact margins
- Higher taxes in base quarter aid net profit
- Other expenses include forex loss of Rs 6.24 crore this quarter
- Pigment segment revenue down 1% to Rs 402.2 crore
- Other segment revenue up 83% to Rs 46.9 crore
- All numbers are consolidated and compared on a year-on-year basis
Info Edge Q4FY20
- Revenue up 7.8% to Rs 327.6 crore
- Ebitda up 6.4% to Rs 91.8 crore
- Ebitda margin at 28% from 28.4%
- Net profit down 63.7% to Rs 119 crore
- Losses made by associates and JVs impact profit
- Associates and JV shared loss of Rs 136 crore from a profit of Rs 90 crore
- Exceptional loss widens to Rs 183 crore from Rs 159 crore
- All numbers are consolidated and compared on a year-on-year basis
Earnings Expectations: Asian Paints Q4FY20
- Revenue seen 4% lower at Rs 4,812 crore
- Ebitda seen 7% higher at Rs 884 crore
- Ebitda margins seen at 18.4% from 16.4%
- Net profit seen 8% higher at Rs 512 crore
- All estimates are Bloomberg estimates, consolidated and compared on a year-on-year basis
Key Factors At Play For Asian Paints:
- Volume growth for the domestic paints business seen between 0-1%
- Impact on gross margin from price of key raw material and product mix trends
- Pricing and discount trends
- Management commentary on demand outlook
- Performance and outlook on the industrial paints business
Brokerage Radar
BofA Securities On Reliance Industries
- Buy rating maintained
- Price target of Rs 1,940
- Bull-case valuation models FY22 cellular ARPU at Rs 200
- Jio's IPO to act as another catalyst for the stock over time
- Expect Jio's ARPU to stabilise to Rs 250 in the long-term
- Digital ads to be another revenue generation opportunity
CLSA On Cement
- Channel checks suggest cement demand fell only 5-15% in May as compared to a decline of 35-40% year-on-year
- Sharpest recovery seen in Central and East India
- Prices have fallen by Rs 5-10 per bag in most regions. However, blended all-India price remains 4% higher on a quarter-on-quarter basis
- See upside potential to price estimates but await demand clarity before being more constructive
- Most companies or dealers are cautious on near-term demand as current pick-up is likely from pent-up demand
- Expect sustained demand recovery post-monsoons
- Prefered picks are ACC and Ambuja
Nomura On Colgate Palmolive
- Initiate coverage with buy rating
- Price target of Rs 1,620
- Elevated oral hygine consciousness to drive consumer habit changes
- Stepped up innovation and new product launches
- One of the most stable company in a very stable category
- See FY21/22/23 earnings growth of 8%, 15% and 15% respectively
HSBC On LIC Housing Finance
- Hold rating maintained
- Price target cut to Rs 285 from Rs 295
- Earnings missed estimates due to lower NIMs
- Higher opex and higher tax outgo weighed on earnings
- Asset quality and coverage largely stable
- Negligible coverage on non-stage 3 loans is concerning
- Current valuation factors in most negatives
Nomura On Balkrishna Industries
- Buy rating maintained
- Price target of Rs 1,445
- Sales in Europe and U.S. recovered to pre-Covid-19 levels in May and June
- Gaining market share, especially in France due to various past promotional events
- Commodity tailwinds to keep Ebitda margin visibility well over 30% in the near-term
- Capex spends to drop from FY22 and drive stronger free cash flow
Nomura On AIA Engineering
- Maintain Buy; target price of Rs 1900
- AIAE least impacted by COVID-19-related lockdown vs other industrial peers
- Revenue ahead of estimates, led by strong volumes
- Lower realisations led to lower margins
- OCF generation significantly ahead of trend rate
- Increased FY20 dividend payout, guides for lower payout at 20-25% to conserve cash
- Key risks include customers’ bankruptcies and slower-than-expected adoption of chrome grinding media
JPMorgan on ICICI Bank
- Maintain Overweight, target at Rs 390 per share
- Subsidiary stake sale positive to boost capital buffers
- ICICI Bank stock no longer in a deep zone
- Stock offers reasonable upside if slippage rates normalize back in FY22
JPMorgan on Cement
- India Cement sector has surprised positively on pace of normalisation
- Cement pricing also seen strength across regions
- June is witnessing positive demand growth trends led by rural
- India cement prices are near all-time highs driven by good discipline
- Like ACC as a key ‘’ pick
- Ultratech Cement is our preferred ‘growth’ pick
Bulk Deals
- ICICI Pru Life Insurance: Government of Singapore acquired 1.64 crore shares (1.14%) at Rs 391.6 per share.
- Glenmark Pharma: HSBC Pooled Investment Fund sold 18.8 lakh shares (0.67%) at Rs 527.7 per share.
- Indostar Capital Finance: Edelweiss Mutual Fund acquired 22.65 lakh shares (2.45%) at Rs 285 per share and Mission Street sold 22.65 lakh shares (2.45%) at Rs 285 per share
Who’s Meeting Whom
- Rico Auto: To meet Nirmal Bang on June 23
- Affle India: To meet ICICI Prudential Mutual Fund and Neuberger Berman between June 23-24
- Indian Energy Exchange: To meet IIFL AMC, Franklin Templeton and other investors between June 23-25.
- CG Consumer Electricals: To meet Falcon Edge Capital on June 25
- Shriram City Union Finance: To meet Hara Global, Fidelity International and Matthews Asia between June 23-26
- Amber Enterprises: To meet Axis Capital on June 23
Trading Tweaks
- Price Band Revised From 10% To 5%: Century Extrusions, HPL Electric & Power, Nahar Poly Films, Premier Explosives, Reliance Infrastructure, Veto Switchgears And Cables.
- Price Band Revised From 20% To 10%: Dhanlaxmi Bank, Suven Pharmaceuticals, Zee Learn
- Move Into ASM Framework: Birla Cable, Adlabs Entertainment, Kisan Mouldings, Jayant Agro Organics, Kwality, Sanwaria Consumer, Reliance Naval & Engineering, Jaypee Infratech, Ballarpur Industries.
- Move Into Short-Term ASM Framework: Inox Wind, Usha Martin, Indian Terrain Fashions, Paisalo Digital, Genus Power Infrastructures, Capacit'e Infraprojects, Muthoot Capital Services, Orient Cement
- Move Out Of Short-Term ASM Framework: Ashapura Minechem, HLE Glascoat, Panacea Biotec, Ramco Systems, Shriram EPC
Insider Trades
- Nesco: Promoter Patel Consultancy acquired 9,500 shares on June 18
- IOL Chemicals and Pharma: Promoter NCVI Enterprises acquired 14.18 lakh shares between June 8-17
- Mangalore Chemicals and Fertilizers: Promoter Adventz Finance acquired 16.15 lakh shares between June 17-18.
- IndusInd Bank: Promoter IndusInd International Holdings acquired 1.39 lakh shares between June 18-19.
(As Reported On June 22)
Money Market Update
- The currency ended stronger on Monday at 76.03 against the U.S. Dollar as compared to Friday's closing of 76.19.
- Rupee ended as the best performing currency in Asia.
F&O Cues
- Nifty June futures closed at 10,288; discount narrows to 9 points from 16 points
- Nifty June futures shed 10% and 9,200 shares in Open Interest
- Nifty Rollovers at 27%
- Nifty Bank June futures closed at 21,697; discount narrows to 11 points from 62 points
- Nifty Bank June futures shed 1.6% and 2.1 lakh shares in Open Interest
- Nifty Bank rollovers at 14.4%
- Nifty Put-Call Ratio at 1.53 from 1.56 across all series
- Enter F&O Ban: Century Textiles, Vodafone Idea
- Exit F&O Ban: Adani Enterprises, BHEL, Just Dial, PNB, SAIL
- Stocks In F&O Ban: Century Textiles, Vodafone Idea, JSPL, NCC
Nifty Monthly Expiry: June 25
- Maximum Open Interest on Call side at 10,500 strike (35.8 lakh shares)
- Maximum Open Interest on Put side at 10,000 strike (46.2 lakh shares)
- Active Options: 10,100 Put (+12.4 lakh shares) and 10,500 Call (+6.2 lakh shares)