All You Need To Know Going Into Trade On October 26

Stocks in Asia were mixed at the open following the biggest declines in seven weeks on Wall Street as uneven corporate earnings keep traders on edge ahead of reports from technology giants, banks and a European Central Bank meeting.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, declined 0.33 percent to 10,260 as of 7:00 a.m.

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Daybreak

Here’s a quick look at all that could influence equities on Thursday.

Global Cues

• U.S. stocks dropped the most in seven weeks while the dollar slumped as an uneven batch of corporate earnings reports thwarted a risk-on rally and turmoil in Washington threatened the president’s tax overhaul.

Asian Cues

• Japan’s Topix index was up 0.2 percent, while the Nikkei 225 Stock Average rose 0.3 percent
• Australia’s S&P/ASX 200 Index fell 0.2 percent and South Korea’s Kospi index was flat
• Hang Seng Index futures declined 0.8 percent
• Futures on the S&P 500 Index were little changed.

These are some of the key events coming up:

• Hong Kong reports on imports and exports on Thursday, while Japan updates on CPI Friday
• The U.S. economy probably expanded at about a 2.5 percent annualized pace in the third quarter, restrained in part by the effects of two hurricanes, economists forecast the government to report on Friday
• Norway’s Norges Bank and Sweden’s Riksbank rate decision on Thursday

Commodity Cues

• Gold rose 0.1 percent to $1,278.78 an ounce.
• West Texas Intermediate crude was at $52.15 a barrel.

Shanghai Exchange

• Steel snaps four-day winning streak; down 1.93 percent
• Aluminium trades higher for third day; up 0.86 percent
• Zinc trades higher for third day; up 1.19 percent
• Copper trades higher; up 0.07 percent
• Rubber trades lower; down 0.07 percent

Indian ADRs

Nifty Earnings To Watch

Yes Bank

Other Earnings To Watch

• Biocon
• Crompton Greaves Consumer Electricals
• Cummins India
• Equitas Holdings
• Gic Housing Finance
• Indiabulls Ventures
• Jubilant Foodworks
• L&T Finance Holdings
• Shoppers Stop
• Sharda Cropchem
• Srei Infrastructure
• Vijaya Bank
• Whirlpool of India
• United Spirits

Results Announced

RBL Bank (Q2FY18 YoY)

• NII up 38.7 percent to Rs 420.2 crore
• Net profit up 67.8 percent to Rs 151 crore
• Gross NPA at 1.44 percent versus 1.46 percent (QoQ)
• Net NPA at 0.78 percent versus 0.81 percent (QoQ)

PNB Housing (Q2FY18 YoY)

• Net Interest Income grew 69 percent to Rs 386 crore
• Net Profit up 51 percent to Rs 208 crore
• GNPA at 0.34 percent, Net NPA at 0.26 percent

EIL (Q2FY18 YoY)

• Net Sales up 27 percent at Rs 429 crore
• Net profit up 25 percent at Rs 119 crore
• EBITDA up 48 percent at Rs 139.2 crore
• Margins at 32.4 percent versus 27.8 percent

Quess Corp (Q2FY18 YoY)

• Revenue up 25 percent at Rs 1274 crore
• EBITDA up 18 percent at Rs 66 crore
• Margins at 5.2 percent versus 5.5 percent
• Profit up 370 percent at Rs 141 crore
• Income tax credit from previous year of Rs 67.5 crore pushed profits higher

Agro Foods (Q2FY18 YoY)

• Revenue down 2.4 percent at Rs 197 crore
• Net Profit up 15.9 percent at Rs 8 crore
• EBITDA up 18.4 percent at Rs 17.4 crore
• Margins at 8.8 percent versus 7.3 percent

Everest Industries (Q2FY18 YoY)

• Revenues up 7.5 percent at Rs 259 crore
• Net profit at Rs 4.5 crore versus loss of Rs 8 crore
• EBITDA at Rs 11 crore versus EBITDA loss of Rs 2 crore
• Margins at 4.2 percent versus -0.9 percent

Syngene (Q2FY18 YoY)

• Revenues up 10.5 percent at Rs 335 crore
• Net profit up 2.9 percent at Rs 76.9 crore
• EBITDA up 7.6 percent at Rs 113.5 crore
• Margins at 33.9 percent versus 34.8 percent

Mindtree (Q2FY18 YoY)

• Revenue up 3.3 percent at Rs 1332 crore
• Net Profit up 2.5 percent at Rs 125 crore
• EBIT up 11.3 percent at Rs 109 crore
• EBIT Margin at 8.2 percent versus 7.6 percent

Hindustan Unilever (Q2FY18 YoY)

• Revenue up 6 percent at Rs 8309 crore
• EBITDA up 19.7 percent at Rs 1682 crore
• Margins at 20.2 percent versus 17.9 percent
• Profit up 16.4 percent at Rs 1276 crore
• Volumes up 4 percent

Exide (Q2FY18 YoY)

• Revenue up 23.2 percent at Rs 2371.3 crore
• Net Profit down 25.5 percent at Rs 136 crore
• EBITDA up 2.3 percent at Rs 295.8 crore
• Margins at 12.5 percent versus 15 percent

M&M Financial (Q2FY18 YoY)

• NII up 16.3 percent at Rs 911 crore
• Net Profit down 17.7 percent at Rs 78 crore

PI Industries (Q2FY18 YoY)

• Revenue down 2 percent at Rs 561 crore
• Profit down 21 percent at Rs 80 crore
• EBITDA down 5 percent at Rs 121.5 crore
• Margins at 21.7 percent versus 23.4 percent

Tata Communication (Q2FY18 YoY)

• Revenue down 2.1 percent at Rs 4,218 crore
• EBITDA up 1.2 percent at Rs 565.5 crore
• Margins at 13.4 percent versus 13 percent
• Net loss of Rs 250 crore versus profit of Rs 32 crore
• Exceptional expense of Rs 186 crore

Astec LifeSciences (Q2FY18 YoY)

• Revenue up 6.7 percent at Rs 96 crore
• Net Profit down 39.6 percent at Rs 6.7 crore
• EBITDA down 36.1 percent at Rs 14.7 crore
• Margins at 15.3 percent versus 26.9 percent

Stocks To Watch

• RBI asks HDFC Bank to classify one of its accounts as NPA
• HDFC Life board approves IPO of up to 29.98 crore shares
• Wipro completes acquisition of Cooper Software
• Sarda Energy & Minerals shuts down one of its power generating units for replacement of old turbine machine
• Phoneix Mills says NCLT approves scheme of merger of 2 of its subsidiaries
• GVK Power confirmed it has received the order for Navi Mumbai Airport
• SBI and Canara Bank clarified that it has yet to take a decision on sale of any non-core assets
• Quess Corp to acquire 70 percent stake in Vedang Cellular Services for Rs 40 crore
• Navkar Corp QIP opens at a floor price of Rs 192.29 per share.
• Supreme Court says no to Jaypee on Yamuna Expressway sale, extends deadline to deposit Rs 2,000 crore in relation to the insolvency proceedings.

Circuit Revision

• JMT Auto: Circuit filter revised to 10 percent

Bulk Deals

MAS Financial Services

• TIMF Holdings bought 5.83 lakh shares at Rs 659.29 each

JB chemicals and Pharma

• Kotak Mahindra AMC sold 6 lakh shares or 0.7 percent equity stake at Rs 280 each

Saksoft

• Promoter SAK Industries Pvt Ltd bought 98,765 shares or 0.9 percent equity stake at Rs 200 each
• Ajit Thomas sold 1 lakh shares or 1 percent equity stake at Rs 200.01 each

IPO

• Reliance Nippon Life Asset Management continues on Day 2. The issue was subscribed 4.6 times on Day 1.

Who’s Meeting Whom?

• FIEM Industries to meet Canara HSBC OBC Life Insurance company on October 26
• GHCL to meet series of investors in London on October 26
• Redington meet analysts on October 31
• Kamat Hotel investors conference on November 1

Insider Trades

• Mawana Sugars promoter Siddharth Shriram sold 1.1 lakh shares in open market on October 23
• Wim Plast promoter bought 1 lakh shares from open market on October 23
• Prime Focus promoter revoked 8.45 lakh shares from pledge

Rupee

• Rupee closed at 64.89 against the dollar, up 0.26% from its Tuesday’s close of 65.06.
• The 10-year bond yield closed at 6.811 percent, a level last seen on May 12, compared to its previous close of 6.775 percent.

Top Movers & Shakers This Month

Index Trends

F&O Cues

• Nifty October Futures closed with a discount of 11.6 points from an 11.6 point premium
• Nifty November Futures trading at 10,325, premium of 30 to spot
• Nifty Rollover at 44 percent, Bank Nifty Rollover at 47 percent
• Nifty open interest up 2 percent, Bank Nifty open interest up 16 percent across series
• India VIX closed higher by 1.5 percent at 11.76
• Max open interest for November series at 10,500 Call and 10,000 Put strike
• October Call strikes 10,200 , 10,250 saw unwinding and addition was seen for 10,300 & 10,350 strikes
• October Put strike 10,250, 10,300 saw open interest addition

F&O Ban

• In ban: DHFL, Indiabulls Real Estate, Infibeam, IRB infra, JP Associates, JSW Energy, Reliance Communications
• New in ban: IRB Infra
• Out of ban: Bharat Earth Movers, HDIL

Put-Call Ratio

• Nifty PCR unchanged at 1.61
• Nifty Bank PCR at 1.45 from 1.0

Fund Flows

Brokerage Radar

CLSA on Tata Motors

• Maintain Sell; Hiked price target to Rs 395 from Rs 380
• JLR faces a challenging industry environment, given softening luxury auto demand in West
• Volume growth, excluding new models, has decelerated sharply
• Response to ‘Discovery’ has been a tad soft
• Expect margins to remain under pressure given rising incentives, weakening product mix and an ageing portfolio
• Skeptical on turnaround of India business
• Price target hiked to factor in lower India losses and a stronger GBP/INR

Credit Suisse on Oil & Gas Sector

• Strong petchem demand and lower ethylene supplies aiding naphtha
• LPG markets see supply tightness in U.S. and Middle East
• Expect strong Naphtha and LPG margins for the next two quarters
• Seasonally peak petchem demand and winter heating demand to boost Naphtha and LPG
• LPG and Naphtha account for 5 percent and 8 percent respectively of Indian refinery output
• Positive for Indian refiners and GAIL; Indian Oil and BPCL are top picks

Deutsche Bank on HCL Technologies

• Maintain Sell; hiked price target to Rs 720 from Rs 700
• Maintained margin guidance is aided by extremely conservative software amortisation policy
• Q2 earnings was a miss and expect seasonal weakness in H2
• HCL to deliver FY18 $ revenue growth of 11 percent (YoY), EBIT margin of 19.9 percent and EPS of Rs 59.4
• Cut earnings estimate by 4-5 percent for FY18/FY19
• Expect HCL’s earnings to grow at CAGR of 3 percent over FY18-20

IDFC Securities on HCL Technologies

• Maintain Neutral with a price target of Rs 895
• Q2 results: Another revenue miss, but margin beat
• Revenue drag in H2 to restrict growth to lower end of guidance
• Expect Revenue and EPS to grow at CAGR of 10 percent and 8 percent respectively over FY17-19
• Negatives: deceleration in IMS, risk of accelerated IP investments and revenue erosion of legacy portfolio
• Limited margin levers and sustained pricing pressure leave limited room for positive surprise on earnings

Macquarie on HCL technologies

• Maintain Outperform with price target of Rs 1,033
• Expect HCL to post the strongest $ revenue growth of 12 percent (YoY) in FY18
• Large deal wins in H1FY18 to help the company meet its FY18 guidance
• Pecking order: HCL Tech>Infosys>TCS >Wipro and Tech Mahindra

IDFC Securities on Kotak Mahindra Bank

• Maintain Neutral with price target of Rs 910
• Q2FY18 Highlights: Strong and better-than-expected loan growth and growth in savings deposits
• Kotak’s to deliver better earnings than sector as it does not face corporate stress
• Kotak needs to deliver consistently on higher loan growth and fees to justify its rich valuations
• Recap to benefit private banks according to management

Credit Suisse on Kotak Mahindra Bank

• Maintain Neutral with price target of Rs 950
• Q2FY18: Loan growth remains strong but net interest margins decline
• Cut earnings estimates by 3-4 percent on lower NIMs and other income
• Stock remains expensive

Macquarie on Kotak Mahindra Bank

• Maintain Neutral with price target of Rs 940
• Guidance of 20 percent YoY loan growth for FY18 looks achievable
• Expect 21 percent loan CAGR over FY18-20
• Kotak’s well capitalised but lower leverage is suppressing return on equity
• Buy on HDFC Bank as it is quality franchise, equally impressive and offers much higher RoE for slightly higher valuations

Nomura on Exide

• Maintain Buy with price target of Rs 251
• Inventory build-up post GST in Q1FY18 benefitted volumes
• Revenue growth of 14 percent in H1FY18 would be a better way to look at growth
• Price increases in replacement segment important for margin trajectory as lead prices are higher
• Expect 14.8 percent and 15 percent margin in FY18 and FY19 estimates respectively; Expect lead cost increases to be passed on

Deutsche Bank on Exide

• Maintain Hold with price target of Rs 200
• Commodity pressures lead to subdued earnings growth in Q2
• Revenue beat likely on account of price hikes taken to offset pressure from higher lead prices.
• Expect robust revenue growth led by stabilisation in automotive battery market-share/pricing and cyclical uptick in industrial batteries
• Expect EPS to grow at CAGR of 13 percent over FY17-20

IDFC Securities on Glaxosmithkline Pharma

• Maintain Underperform with price target of Rs 2,191
• Q2 revenues impacted by 6 percent due to deflationary impact in prices on account of the GST
• Glaxo showing signs of recovery after prolonged period of slow growth and supply related disruptions
• H1FY18 was significantly impacted by GST, Turnaround to get further delayed

UBS initiates coverage on Oil Marketing Companies

• Initiate coverage of PSU OMCs Indian Oil (IOCL), Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) with Buy rating.
• Among standalone refiners, they initiate coverage of Chennai Petroleum (CPCL) with a Buy, and Mangalore Refinery (MRPL) with a Neutral.
• Expect earnings to pick up, driven by steady volume and margin expansion
• Expect govt support on free pricing for socially sensitive cooking fuel (LPG) should also drive constant earnings growth
• Forecast 12 percent CAGR over FY18-22 for PSU OMC’s