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All You Need To Know Going Into Trade On Oct. 7

Stocks in the news, big brokerage calls of the day, complete trade setup and much more! 

A morning commuter waits to cross a road in Tokyo, Japan (Photographer: Takaaki Iwabu/Bloomberg)  
A morning commuter waits to cross a road in Tokyo, Japan (Photographer: Takaaki Iwabu/Bloomberg)  

U.S. stock futures fell, the yen edged up and the yuan slipped in early trading Monday after a report that China may be increasingly reluctant to agree to a broad trade deal with the Trump administration.

The report from Bloomberg also left Japanese stocks with limited gains in the wake of a solid rally in the S&P 500 Index on Friday.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.15 percent to 11,222 as of 7:15 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.

Here’s all that could influence equities today.

  • Wall Street benchmarks advanced on Friday after solid U.S. hiring data quelled recession fears without crushing the odds of further Federal Reserve easing.
  • Oil held its biggest weekly decline since July ahead of the trade talks, as a string of disappointing data sparks fears of an economic slowdown.
  • Hong Kong markets are closed for a holiday, leaving traders with limited options to respond -- or not -- to escalating violence in the city, with protesters setting fires and vandalizing train stations and banks over the weekend.
  • China is also shut, and Sydney has a holiday Monday, also limiting trading.

Get your daily fix of global markets here.

Opinion
Is the U.S. Headed for a Recession? Bulls, Bears Make Their Case

Indian ADRs

All You Need To Know Going Into Trade On Oct. 7

Stocks To Watch

  • Container Corporation of India to contest DGFT claim on benefit under export scheme program. The company says it had claimed a benefit of Rs 1,044 crore for FY16-19, but DGFT said that claims up to Rs 861 crore are not eligible for the export benefit. This is subject to further verification by the authorities central licensing area office.
  • Bosch said that at its various plants belonging to Powertrain Solutions division, would continue to observe ‘no production days’ for up to 10 days per month per plant during the third quarter of the FY20.
  • Talwalkars Healthclubs has defaulted on payment of two NCDs and a term loan aggregating to Rs 63.54 crore. The default is on interest and principal for two NCDs issued to Laxmi Vilas Bank for Rs 54.76 crore, where the due dates were Aug. 20 and Oct. 3. It also defaulted on payment of interest and principal amount for a term loan given by Axis Bank, South Indian Bank, Hero Fincorp, Indian Bank and Andhra Bank aggregating to Rs 8.78 crore, which fell due on July 31. Company said that it has Rs 463.15 crore worth of total borrowings and is in discussion with its bankers for restructuring of its debt obligations.
  • Talwalkars Better Value Fitness has defaulted on payment of an NCD and a term loan aggregating to Rs 32.37 crore. The default is on interest and principal for NCD issued to Laxmi Vilas Bank for Rs 27.38 crore, where the due date was Oct. 4. It also defaulted on payment of interest and principal for a term loan given by Axis Bank, South Indian Bank and Andhra Bank aggregating to Rs 4.99 crore, which fell due on July 31. Company said that it has Rs 203.86 crore worth of total borrowings.
  • Reliance Home Finance said that it is in discussions with several potential strategic and PE partners for equity infusion into the business, accompanied with acquisition of complete management control. Reliance Capital will continue as a minority financial investor. The delay in ongoing securitisation/monetisation proposals have resulted in delay on principal repayments of Rs 542 crore to around 5-6 banks. Company expects to regularize all such repayments very shortly.
  • HDFC said that its original cost of investment in RBL Bank is Rs 59 crore. As on June 30, the market value stood at Rs 562 crore. From April onwards due to transition to Ind AS a large part was the gain was adjusted in the transition reserve consequent to a drop in shares of RBL Bank. The market value of the investment on Sept. 30 stood at Rs 290 crore. Due to accounting norms, an amount of Rs 272 crore has been debited in statement of profit and loss account for the September quarter. The Corporation said that it stands at a gain of Rs 231 crore from the investment in RBL Bank.
  • Zee Entertainment Enterprises: Promoter Essel Media Ventures created an encumbrance over the 10.28 crore shares, representing 10.71 percent stake in the company in favor of VTB Capital. The encumbrance was created pursuant to the loan agreement executed on September 2017.
  • Ashok Leyland said that its plants at various locations will be observing non-working days ranging from 2-15 days during October.
  • Embassy Office Parks REIT: Certain sponsor group members have created a pledge of 33.2 crore units, which constitute 43.02 percent of the total outstanding units of the REIT with a value of Rs 12,392 crore in favour of Deutsche Bank. This is in relation to the credit facility of Rs 4,169 crore availed by the borrower I-REIT ML (NQ) from specific overseas banks. Pledge was created on June 24. Security cover ratio as on date of creation of pledge was 2.97 times. Blackstone Sponsor Group holds 55.3 percent of the total units.
  • Tata Motors has won order for 300 electric buses from Ahmedabad Janmarg
  • Lupin has launched Mycophenolate Mofetil Capsules. Lupin’s alliance partner Concord Biotech had received an approval from U.S. FDA.
  • VST Tillers Tractors September Sales: Power Tillers sales up 4 percent at 5,609 units versus 5,396 units. Tractors sales up 5 percent at 2,201 units versus 2,087 units.
  • Future Retail: IDBI Trusteeship Services created pledge of 1.1 crore shares on behalf of Aoin Investments and ICICI Venture Employee Welfare Trust on Oct. 1.
  • Wipro has completed the acquisition of International TechneGroup on Oct. 3.
  • NHPC has signed agreement for implementation of the approved resolution plan submitted by the company for takeover and resolution of Lance Teesta Hydro Power Limited, who was implementing the 500 MW project in Sikkim. NHPC has offered Rs 897.5 crore as resolution plan proceeds.
  • Oriental Bank of Commerce has reduced its repo rate component linked Retail and MSME loan products by 25 basis points with effect from Oct. 5.
  • NIIT: Board has fixed Oct. 18 as the record date for share buyback of the company.
  • Info Edge to acquire 20.25 percent stake in Greytip Software for Rs 35 crore. The target company deals with in human resource and payroll solutions. Company clarified on the news of Zomato’s fundraising that no formal proposal has been sent to the Board.
  • Power Grid Corporation has been declared lowest bidder for 765kV transmission project in Rajasthan for Rs 10.24 crore.
  • BEML received order worth Rs 729 crore from Delhi Metro Corporation.
  • JSW Steel has raised $400 million by allotment of notes.

Brokerage Radar

Morgan Stanley on HDFC Bank

  • Maintained 'Overweight' with target price of Rs 1,700.
  • Strong sequential pick-up in growth.
  • Initial trends appear somewhat better than expected.
  • Await for more details on loan mix, margin progression and asset quality.

Morgan Stanley on Bajaj Finance

  • Maintained 'Equal-weight' with target price of Rs 3,700.
  • Strong AUM growth, albeit moderation.
  • Moderation in new customer acquisition continued inline with mgmt. commentary in first quarter.
  • Key to watch will be asset quality.

Morgan Stanley on Container Corp

  • Downgraded to 'Equal-weight' from 'Overweight'; hiked target price to Rs 572 from Rs 566.
  • Downgrade due to outperformance and SEIS disallowance.
  • Cut financial years 2020-22 earnings per share estimates by 12-14 percent on SEIS disallowance, marginally offset by tax rate cut.

Nomura on Indian Autos

  • Risk of slower recovery; steep slowdown ahead.
  • Passenger vehicle industry growth to struggle due to rising regulatory costs and slower economic growth.
  • Two-wheeler industry could face higher challenges, as costs should rise.
  • In mid-heavy commericial vehicle space, believe that volumes are already tracking below replacement levels.

Maruti Suzuki: Downgraded to 'Reduce' from 'Neutral'; cut target price to Rs 6,202 from Rs 6,290.

Tata Motors: Downgraded to 'Reduce' from 'Neutral'; cut target price to Rs 109 from Rs 146.

Ashok Leyland: Maintained 'Buy'; cut target price to Rs 84 from Rs 87.

M&M: Maintained 'Buy'; hiked target price to Rs 677 from Rs 663.

Hero MotoCForp: Maintained 'Neutral'; hiked target price to Rs 2,972 from Rs 2,503.

Bajaj Auto: Maintained 'Neutral'; hiked target price to Rs 3,064 from Rs 2,836.

TVS Motor: Maintained 'Reduce'; hiked target price to Rs 358 from Rs 352.

Eicher Motors: Maintained 'Reduce'; hike target price to Rs 15,934 from Rs 13,780.

Citi on Godrej Consumer

  • Maintained 'Neutral' with target price of Rs 655.
  • Could be among the few staple companies where domestic volume growth could improve sequentially.
  • Think that negative contribution of pricing/mix has also widened, given increased promos/offers/price cuts.
  • Mixed trends overseas; margin expansion should continue.

Citi on Container Corp

  • Maintained 'Buy' with target price of Rs 621.
  • DGFT disallowed SEIS claim of Rs 861 crore out of Rs 1044 crore.
  • Amounts to approximately Rs 10.2 per share impact on a post-tax basis.
  • Impact on Container Corp is manageable.

Axis Capital on Zee Entertainment

  • Placed 'Under Review' from 'Buy'
  • Under Review given high promoter pledge under the revised disclosures.
  • Expect stock to remain volatile in near term till further clarity emerges on deleveraging.
  • More than 90 percent of promoter stake is pledged now, however it won't be required to top up the pledge on further stock correction.
  • Current management will continue to run the business even if its stake reduces to single digit.

IDFC Securities on Zee Entertainment

  • Maintained 'Outperformer'; cut target price to Rs 416.
  • Have kept faith in management for long time.
  • Continue to believe in business fundamentals and intrinsic value.
  • At current stock price, there isn't much to lose fundamentally.
  • If some strategic investor were to come in, it could lead to significant upside.

Equirus Securities on Varroc Engineering

  • Initiated 'Long' with target price of Rs 546.
  • Market share gains in lighting biz led by new customer acquisitions, geographic expansion.
  • Scale enhancement, backward integration to drive margin expansion.
  • Capitalizing on BS-VI opportunity by new product addition and increasing content per vehicle
  • Expect Revenue/EBITDA/Net Profit to grow at 6 percent/11 percent/17 percent annualised growth rate over financial years 2019-22.

Equirus on Bearing Industry

  • SKF India: Initiated 'Add' with target price of Rs 2,287.
  • Schaeffler India: Initiated 'Reduce' with target price of Rs 4,185.
  • SKF to reverse trend of lagging growth with order wins for Gen3 bearings from couple of automakers.
  • SKF would be able to bid for full quantity of railway freight bearings due to secured approvals.
  • Schaeffler would face more headwinds on account of demand slowdown in auto and transition to petrol engines, automatic transmissions and electric vehicles.
  • Schaeffler would have an edge over SKF is faster localisation of industrial bearings.

Bulk Deals

Manpasand Beverages

  • Porinju Veliyath promoted Equity Intelligence India acquired 6.6 lakh shares (0.58 percent) at Rs 6.45 each.

Pledge Share Details

  • JSW Energy promoter Glebe Trading released pledge of 1.15 crore shares on Sept. 30
  • Adani Enterprises promoter group Gautam Adani revoked pledge of 43.8 lakh shares on Sept. 30
  • Adani Ports & SEZ promoter group Gautam Adani revoked pledge of 1.1 crore shares on Sept. 30
  • Future Consumer promoter Future Capital Investment created pledge of 14.65 crore shares on Oct. 1
  • Future Lifestyle Fashions promoters created pledge of 1.7 crore shares on Oct. 1
  • Future Retail promoter Future Corporate Resources created pledge of 1.23 crore shares from Oct. 1-3

Trading Tweaks

  • MIRC Electronics to move into ASM Framework.
  • Indiabulls Real Estate, Reliance Infrastructure, Alok Industries to move into short term ASM Framework
  • Supreme Infrastructure, HSIL, ICICI Securities, TPL Plastech to move out of short term ASM Framework
  • IIFL Securities price band revised to 20 percent
  • Pioneer Distilleries price band revised to 5 percent

Who’s Meeting Whom

  • Tata Motors to meet HSBC Securities and Capital Markets on Oct. 11
  • Mahanagar Gas to meet Batlivala & Karani Securities on Oct. 9
  • Inox Leisure to meet JM Financial and Nirmal Bank from Oct. 7-9
  • Mahindra Logistics to meet Aditya Birla Capital on Oct. 7

Insider Trading

  • Anant Raj promoter Amar Sarin acquired 40,000 shares on Sept. 30

(As reported on Oct. 4)

Rupee

  • Rupee closed at 70.89/$ on Friday from 70.88/$ on Thursday

F&O Cues

Futures

  • Nifty October futures closed at 11215, premium of 40.4 points versus 47.8 points
  • Nifty October futures down 2 percent, sheds 3.5 lakh shares in open interest
  • Nifty Bank futures closed at 27,853.7, premium of 121.9 points versus 156.8
  • Nifty Bank October futures open interest up 4 percent, adds 58.9k shares in open interest

Options

  • Nifty PCR at 0.97 versus 1.17 (across all series)

Nifty Monthly Expiry: Oct. 10

  • Max open interest on call side at 11,500 (24.2 lakh shares)
  • Max open interest on put side at 11,200 (10.5 lakh shares)
  • Open interest addition seen at 11,300C (+14 lakh shares), 11,500C (11 lakh shares)

Nifty Monthly Expiry: Oct. 31

  • Max open interest on call side at 12,000 (25.5 lakh shares)
  • Max open interest on put side at 11,000 (24.3 lakh shares)
All You Need To Know Going Into Trade On Oct. 7