All You Need To Know Going Into Trade On Feb. 04
Asian stocks started the week with modest gains following strong U.S. economic data and positive comments out of Washington on the trade talks.
Japanese stocks climbed, partly buoyed by a weaker yen, which held losses from Friday after a better-than-expected U.S. jobs report. Australian stocks also advanced and futures tipped shares to rise in Hong Kong.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.4 percent to 10,864.50 as of 6:55 a.m.
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Here’s a quick look at all that could influence equities today.
U.S. Market Check
- U.S. stocks eked out a small gain as a better-than-expected jobs report and signs of progress in trade talks overshadowed a disappointing sales forecast from Amazon.
- The yield on 10-year Treasuries was little changed at 2.69 percent after rising five basis points Friday.
- Japan’s Topix index gained 0.9 percent.
- Australia’s S&P/ASX 200 Index rose 0.5 percent.
- S&P 500 Index futures rose 0.1 percent.
- Brent crude declined 0.11 percent to $62.68 per barrel after rallying for four days.
- West Texas Intermediate crude was steady at $55.29 a barrel, holding on to a 2.7 percent surge Friday.
- Gold was little changed at $1,317.18 an ounce.
London Metal Exchange
- Aluminium halted a four-day rally, ended 1.41 percent lower.
- Nickel rallied for the fourth day, ended 1.44 percent higher.
- Tin rallied for the fourth day, ended 0.19 percent higher.
- Zinc rallied for the third day, ended 2.13 percent higher.
- Lead rallied for the third day, ended 0.71 percent higher.
- Copper halted a three-day rally, ended 0.49 percent lower.
Key Events/Data To Watch This Week
- Feb. 05: Nikkei India Services PMI and Composite PMI
- Feb. 07: RBI Monetary Policy Meet
- Markets across Asia, including China, Hong Kong, Singapore, Taiwan, South Korea, Malaysia and Vietnam, will close for part or all of the week to mark the start of the Year of the Pig.
- China, Korea, Taiwan markets are closed Monday.
- U.S. President Donald Trump delivers a delayed State of the Union address Tuesday
- On Wednesday, Federal Reserve Chairman Jerome Powell hosts a town hall meeting with educators, his first public comments following the January FOMC meeting and rate decision.
- On Tuesday, the Reserve Bank of Australia sets monetary policy.
- On Thursday, the Bank of England sets interest rates and updates its economic forecasts. No change in policy is expected.
- Also Thursday, the Reserve Bank of India unveils a rate decision.
Stocks To Watch
- Reliance Communications said it will propose a similar debt resolution plan to the National Company Law Tribunal that it had been pursuing outside the court.
- DHFL: Care Ratings downgraded Rs 1.2 lakh crore worth of bonds, loans and deposits issued by Dewan Housing Finance citing the sharp reduction in its share price and the significant rise in bond spreads.
- Tech Mahindra’s board approved the acquisition of 100 percent stake in Netherland-based company Dynacommerce Holding for 4.39 million euros and contingent payments to be made over the period of 5 years. The company will also settle the debt of its target company for 11.48 million euros. The transaction is expected to close by February subject to RBI approval.
- Coal India’s January provisional production rose 0.9 percent to 57.2 MT versus 56.68 MT in January 2018 and production offtake fell 2.3 percent to 52.44 MT.
- Wipro launched digital solution for television receivers and antennas. It partnered with U.S.-based firm ‘Airwavz.tv’ to cater to the needs of OEMs, ODMs and semiconductor companies.
- Cyient board approved share buyback of up to 28.6 lakh shares or 2.54 percent of paid up equity shares at price of Rs 700 per share aggregating to Rs 200 crore.
- Titan announced interim Managing Director Bhaskar Bhat will retire on Sept. 30. and the company’s current Chief Executive Office of the its jewellery division CK Venkataraman will take over the post of the MD.
- Narayana Hrudayalaya: CEO Ashutosh Raghuvanshi resigned citing personal reasons after 18 years with the group. The hospital operator appointed Emmanuel Rupert as its new CEO and Viren Shetty as the new COO.
- Shanthi Gears’ CEO Rajiv Narayanamoorthy resigned from the CEO’s post with effect from Feb. 1. M Karunakaran will be appointed as the next CEO.
- Newgen Software Technologies announced global strategic alliance with Kodak Alaris for providing digital solutions.
- Apollo Microsystems entered into an agreement with Israel-based company ‘Steadycopter’ to market and promote unmanned aerial vehicles in India or any other territory as may be agreed by both the parties.
- EID Parry board approved issuing NCDs worth Rs 250 crore on private placement basis. Its sugar unit at Puducherry will close due to non-availability of sugar cane for production. The company stated in the press release that it proposes to transfer assets of the unit to other units and also dispose assets as deemed appropriate.
- Brigade Enterprises announced pre-launch of phase-1 of project in Whitefield-Sarjapur Road in Bengaluru.
- Tata Motors’ domestic sales in January dropped 8 percent to 54,915 units on a yearly basis.
- Hero MotoCorp’s January sales dropped 9 percent year-on-year to 5.82 lakh units.
- VST Tiller Tractors’ Power tillers sales were down 3 percent at 1,950 units in January. Tractor sales fell 32 percent to 553 units.
- Xelpmoc Design shares to start trading on BSE/NSE after IPO got 3.3 times demand.
Earnings To Watch
- Aban Offshore
- Ajmera Realty
- Aditya Birla Fashion and Retail
- Artemis Global Life Sciences
- Balrampur Chini Mills
- Bayer Cropscience
- Bombay Burmah Trading Corporation
- Capacit'e Infraprojects
- Exide Industries
- Future Retail
- Garden Silk Mills
- GlaxoSmithKline Pharmaceuticals
- Godrej Agrovet
- Greaves Cotton
- Grindwell Norton
- Honeywell Automation
- IDBI Bank
- Insecticides India
- IRB Infrastructure Developers
- KEI Industries
- Lakshmi Machine Works
- Lakshmi Vilas Bank
- LKP Securities
- Lumax Industries
- Morepen Laboratories
- Munjal Showa
- Navneet Education
- Omkar Speciality Chemicals
- Reliance Naval and Engineering
- Royal Orchid Hotels
- Satin Creditcare Network
- SREI Infrastructure Finance
- Star Cement
- Sun Pharma Advanced Research Company
- Tata Investment Corporation
- Texmaco Infrastructure & Holdings
- Texmaco Rail & Engineering
- Titagarh Wagons
- Firstsource Solutions
- Moschip Semiconductor Technology
- NRB Bearing
- Stylam Industries
- TI Financial Holdings
- ZF Steering Gear
Earnings Reactions To Watch
Divi’s Lab (Q3, YoY)
- Revenue up 29.4 percent at Rs 1,343 crore.
- Ebitda up 60 percent at Rs 523 crore.
- Ebitda margin at 39 percent versus 31.4 percent.
- Net profit up 67 percent at Rs 380 crore.
Future Lifestyle Fashion (Q3, YoY)
- Revenue up 36 percent at Rs 16.2 crore.
- Ebitda up 60 percent at Rs 1.6 crore.
- Ebitda margin at 9.9 percent.
- Net profit up 49 percent at Rs 0.55 crore.
Godfrey Phillips (Q3, YoY)
- Revenue up 13.4 percent at Rs 660 crore.
- Ebitda up 26.5 percent at Rs 115.6 crore.
- Ebitda margin at 17.5 percent versus 15.7 percent.
- Net profit up 26.6 percent at Rs 78.5 crore.
Relaxo Footwear (Q3, YoY)
- Revenue up 20.6 percent at Rs 551 crore.
- Ebitda up 26.5 percent at Rs 115.6 crore.
- Ebitda margin at 13.2 percent versus 15.7 percent.
- Net profit down 6.8 percent at Rs 35.6 crore.
BEML (Q3, YoY)
- Revenue up 26.4 percent at Rs 924 crore.
- Ebitda up 84 percent at Rs 75.8 crore.
- Ebitda margin at 8.2 percent versus 5.6 percent.
- Net profit up 168 percent at Rs 44.7 crore.
Titan (Q3, YoY)
- Net sales up 34 percent at Rs 5,672 crore.
- Ebitda up 30.8 percent at Rs 585 crore.
- Ebitda margin at 10.3 percent versus 10.5 percent.
- Profit up 35 percent at Rs 416 crore.
Berger Paints (Q3, YoY)
- Revenue up 20.8 percent at Rs 1,616.7 crore.
- Net profit up 2.7 percent at Rs 133.9 crore.
- Ebitda up 6 percent at Rs 236 crore.
- Margin at 14.6 percent versus 16.6 percent.
Sheela Foam (Q3. YoY)
- Revenue up 7 percent at Rs 569.2 crore.
- Net profit down 0.5 percent at Rs 38.9 crore.
- Ebitda down 1 percent at Rs 60.8 crore.
- Margin at 10.7 percent versus 11.5 percent.
Deepak Nitrite (Q3, YoY)
- Revenue up 21.9 percent at Rs 452.3 crore.
- Net profit up 55.7 percent at Rs 31.6 crore.
- Ebitda up 26.6 percent at Rs 66.1 crore.
- Margin at 14.6 percent versus 14.1 percent.
- Other income of Rs 5.5 crore.
Equitas Holding (Q3, YoY)
- Net interest income up 37 percent at Rs 320 crore.
- Net profit at Rs 62.5 crore versus net loss of Rs 30 crore.
- Advances up 41 percent at Rs 10,861 crore.
- Disbursements up 43 percent at Rs 2,265 crore.
Akzo Nobel (Q3, YoY)
- Revenue up 10 percent at Rs 783.3 crore.
- Net profit down 26.9 percent at Rs 60.4 crore.
- Ebitda up 2.1 percent at Rs 101.2 crore.
- Margin at 12.9 percent versus 13.9 percent.
- Other income of Rs 18.2 crore in base quarter.
- Jubilant Foodworks: Wasatch Advisors acquired 8.8 lakh shares or 0.67 percent equity at Rs 1,320.2 per share
- Den Networks: Norges Bank sold 11.5 lakh shares or 0.59 percent equity at Rs 71.57 each.
- Zee Entertainment Enterprises: Catalyst Trusteeship sold 74 lakh shares or 0.77 percent equity at Rs 361.42 each.
Bliss GVS Pharma
- Polus Global Fund acquired 83 lakh shares or 8.05 percent equity at Rs 152.92 per share.
- Promoters from Ashra Family and Narsimha Kamath sold 87.2 lakh shares or 8.46 percent equity at Rs 153 per share.
- Arjuna Fund acquired 71,900 shares or 0.51 percent equity at Rs 125.55 each.
- Ashoka Private sold 71,900 shares or 0.51 percent equity at Rs 125.55 each.
- Container Corporation of India ex-date for bonus of 1:4.
Who’s Meeting Whom
- 5paisa Capital to meet SAIF Partners on Feb. 5.
- Mahindra Space Developers to meet Polar Capital LLP, ICICI Pru Life Insurance and other investors between Feb. 11 and 22.
- Sunflag Iron & Steel promoter Supra Corporation acquired 2.12 lakh shares on Jan. 31.
- Vipul promoter Punit Beriwala acquired 27,000 shares between Jan. 29 and 31.
- Tourism Finance Corporation of India promoter LIC sold 1.2 lakh shares between Jan. 25 and 29.
(As reported on Feb. 1)
Money Market Update
- The rupee on Friday ended at 71.25/$ versus Thursday’s closing of 71.08/$.
- Nifty February futures closed trading at 10,914, premium of 20 points.
- Max OI for February series at 11,000 Call, OI at 31.5 lakh shares.
- Max OI for February series at 10,700 Put, OI at 29.7 lakh shares.
Stocks In F&O Ban
- IDBI Bank
- Nifty PCR at 1.63 versus 1.65
- Nifty Bank PCR at 0.8 versus 1.4
- Maintained ‘Outperform’; hiked price target to Rs 1,100 from Rs 1,035.
- Strong December quarter driving earnings upgrade.
- Watches saw good revenue growth, but faced margin headwinds.
- January started on a slightly soft tone for jewellery, but mgmt. hopeful of pick-up in March.
- Maintained ‘Outperform’ with a price target of Rs 1,186.
- December quarter results significantly ahead of estimates on higher jewellery sales.
- Jewellery margin boosted by higher gross margin & lower A&P spends.
- Market share gain remains key thesis; Top pick in consumer space.
- Maintained ‘Buy’; hiked price target to Rs 1,185 from Rs 990.
- Titan’s master strategies have translated into stellar results.
- Retain conviction that Titan is a strong play on discretionary spends.
- Titan to extend its growth run on market share gains, rising share of jewellery, new launches and retail expansion.
- Maintained ‘Neutral’; hiked price target to Rs 315 from Rs 265.
- Lowest slippage ratio in nearly a decade; guidance looks optimistic.
- Mgmt. track record on delivery has been poor; still exercise caution.
- Prefer ICICI Bank to play “normalisation of credit costs” theme.
- Maintained ‘Buy’; hiked price target to Rs 380 from Rs 370.
- Steady asset quality a positive; Loan growth picks up.
- See scope for credit costs to halve over next two years and drive turnaround in earnings.
- SBI remains top pick among PSU banks.
- Maintained ‘Buy’ with a price target of Rs 380.
- Strong show; concern on few exposures.
- Expect SBI to outperform from current levels; expect credit growth to regain momentum.
- Positives: pricing power, resolution of large lumpy NCLT cases, slowdown in slippages and adequate capitalisation.
On Dr. Reddy’s Laboratories
- Maintained ‘Outperform’; hiked price target to Rs 3,200 from Rs 2,850.
- December quarter’s net profit grew 45 percent year-on-year, significantly ahead of estimate.
- Third consecutive quarter of margin improvement led by cost controls.
- Revival of the U.S. growth in 2019-20 is the key catalyst.
- Maintained ‘Neutral’; hiked price target to Rs 2,648 from Rs 2,500.
- Delivered superior December quarter’s performance driven by multiple factors.
- Increased focus on other key regions and cost rationalisation is yielding results.
- Shifting product timelines and reducing complex arbitrage could play spoilsport.
- Maintained ‘Reduce’; hiked price target to Rs 2,450 from Rs 2,400.
- Lower R&D and tax help sustain performance.
- Pipeline execution key for growth, as proprietary products and biosimilars falter.
- Overreliance on select the U.S. opportunities demands lower multiple.
On Westlife Development
- Maintained ‘Buy’ with a price target of Rs 550.
- December quarter results lower-than-estimates; same-store sales growth remains healthy.
- Growth momentum continues, but margin are weak.
- Clarity on revised royalty terms with McDonald’s improves earnings visibility.
- Maintained ‘Buy’; hiked price target to Rs 475 from Rs 410.
- Growth continues; royalty revision a key positive.
- Sustained same-store sales growth momentum led to further improvement in annualized average revenue per store.
- Revised royalty agreement provides improved visibility over margin.