All You Need To Know Going Into Trade On November 15
A global equity selloff deepened in Asia amid signs of an oversupply in commodities and as concerns grows that stocks have become too expensive, in the backdrop of uncertainty about U.S. tax reform.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.4 percent to 10,189 as of 7:00 a.m.
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Here’s a quick look at all that could influence equities on Wednesday.
- U.S. stocks slipped amid signs of a commodities glut and uncertain prospects for American tax cuts, while the dollar lost the most since September as the American yield curve flattened further ahead of inflation data.
- The Stoxx Europe 600 Index sank 0.6 percent, after hitting the lowest in seven weeks with its sixth consecutive decline.
- A Bloomberg commodities gauge dropped the most in six months and crude oil extended declines after the International Energy Agency cut its forecast for demand and cautioned the global market will remain oversupplied.
- Japan's Topix lost 1 percent. The Nikkei 225 Stock Average was down 0.7 percent.
- Australia’s S&P/ASX 200 Index declined 0.4 percent and the Kospi index in Seoul was down 0.5 percent.
- FTSE China A50 futures lost 0.3 percent and contracts on Hong Kong’s Hang Seng
- Index slid 0.2 percent.
- Futures on the S&P 500 were down 0.2 percent. The underlying measure dropped 0.2 percent on Tuesday.
Here are some key events investors are watching this week:
- Japan’s economic growth probably slowed in the third quarter, due to contractions in private consumption and residential and public investment. GDP probably expanded 0.4 percent from the prior three months, down from 0.6 percent.
- Bank of England officials address the bank’s future on Thursday, while European Central Bank chief Mario Draghi speaks Friday.
- A string of Fed appearances may further illuminate the FOMC’s commitment to a December hike.
- U.S. CPI and retail sales data will be released Wednesday morning.
- The Bloomberg Dollar Spot Index was steady after touching the lowest in almost
three weeks on Tuesday.
- West Texas Intermediate crude fell 1.1 percent to $55.08 a barrel, following its 1.9 percent slide on Tuesday.
- Gold was flat at $1,280.60 an ounce after rising for two days.
- Nickel dropped 5.7 percent to 11,780 a metric tonne, its biggest drop since March.
- Sugar snapped seven-day winning streak and closed at 15.1 cents a pound; down 0.2 percent.
- Steel trades lower; down 2.50 percent
- Aluminium trades lower for second day; down 0.9 percent
- Zinc snaps three-day winning streak; down 2.25 percent
- Copper trades lower; down 1.74 percent
- Rubber trades near two-week lows; down 5.23 percent
Earnings To Watch
- CARE Ratings
- Somany Ceramics
- TD Power Systems
- Wonderla Holidays
- Automotive Axles
- Empee Distilleries
- Golden Tobacco
- K.S. Oils
- The New India Assurance Company
- Sumeet Industries
- Universal Cables
Bank of Baroda (Q2FY18, YoY)
- Net interest income up 8.6 percent at Rs 3,720 crore.
- Net profit down 35.6 percent at Rs 355.4 crore.
- NIM at 2.68 percent versus 2.48 percent (QoQ).
- GNPA at 11.16 percent versus 11.40 percent (QoQ).
- NNPA at 5.05 percent versus 5.17 percent (QoQ).
Gail (Q2FY18, YoY)
- Revenue up 9 percent to Rs 12,410 crore.
- Profit up 28 percent to Rs 1,310 crore.
- EBITDA up 9 percent to Rs 2,069 crore.
- Margin at 16.7 percent versus 16.7 percent.
Indiabulls Real Estate (Q2FY18, YoY)
- Revenue up 1.5 percent at Rs 722 crore.
- Profit down 24 percent at Rs 108 crore.
- EBITDA up 72 percent at Rs 299.5 crore.
- Margin at 41.5 percent versus 24.5 percent.
Merck (Q2FY18, YoY)
- Revenue up 16 percent at Rs 313 crore.
- Profit up 12 percent at Rs 32 crore.
- EBITDA up 23.9 percent at Rs 57 crore.
- Margin at 18.2 percent versus 17.1 percent.
Ceat (Q2FY18, YoY)
- Revenue up 7 percent at Rs 1,523 crore.
- Profit down 28 percent at Rs 76.6 crore.
- EBITDA down 5.9 percent at Rs 175 crore.
- Margin at 11.5 percent versus 13 percent.
MOIL (Q2FY18, YoY)
- Revenue up 46.4 percent at Rs 287 crore.
- Profit up 123 percent at Rs 92.7 crore.
- EBITDA up 547 percent at Rs 116.5 crore.
- Margin at 40.6 percent versus 9.2 percent.
Godrej Industries (Q2FY18, YoY)
- Revenue up 11 percent at Rs 2,465 crore.
- Profit up 53 percent at Rs 95 crore.
- EBITDA up 34 percent at Rs 220.5 crore.
- Margin at 8.9 percent versus 7.5 percent.
NLC India (Q2FY18, YoY)
- Revenue down 3 percent at Rs 1,993 crore.
- Profit up 9 percent at Rs 327 crore.
- EBITDA up 32 percent at Rs 817 crore.
- Margin at41 percent versus 30.2 percent.
Infibeam (Q2FY18, QoQ)
- Revenue up 9 percent at Rs 202 crore.
- Profit up 18.75 percent at Rs 19 crore.
- EBITDA up 17 percent at Rs 27 crore.
- Margin at 13.4 percent versus 12.4 percent.
Solar Industries (Q2FY18, YoY)
- Revenue up 30.35 percent at Rs 408 crore.
- Profit up 24.3 percent at Rs 46 crore.
- EBITDA up 33 percent at Rs 87 crore.
- Margin at 21.3 percent versus 20.9 percent.
Honeywell (Q2FY18, YoY)
- Revenue up 16 percent at Rs 673 crore.
- Profit up 64 percent at Rs 74 crore.
- EBITDA up 56 percent at Rs 107.5 crore.
- Margin at 16 percent versus 12 percent.
MRPL (Q2FY18, QoQ)
- Revenue down 11 percent at Rs 9,096 crore.
- Profit up 104 percent at Rs 478 crore.
- EBITDA up 56 percent at Rs 908 crore.
- Margin at 10 percent versus 5.7 percent.
JP Associates (Q2FY18, YoY)
- Revenue down 36 percent at Rs 842 crore.
- Net loss of Rs 186.5 crore versus loss of Rs 781 crore.
- EBITDA at Rs 38 crore versus loss of Rs 86 crore.
- Margin at 4.5 percent versus -6.5 percent.
Dixon Technologies (Q2FY18, YoY)
- Revenue up 19 percent at Rs 879 crore.
- Profit up 31.25 percent at Rs 21 crore.
- EBITDA up 24.6 percent at Rs 35.5 crore.
- Margin at 4.0 percent versus 3.9 percent.
Kwality (Q2FY18, YoY)
- Revenue up 8.5 percent at Rs 1,671 crore.
- Profit down 50 percent at Rs 21 crore.
- EBITDA up 13.6 percent at Rs 117 crore.
- Margin at 7 percent versus 6.7 percent.
Sun Pharma (Q2FY18, YoY)
- Revenue down 19 percent at Rs 6,650 crore.
- Profit down 59 percent at Rs 912 crore.
- EBITDA down 56 at Rs 1,375 crore versus Rs 3,168 crore.
- Margin at20.7 percent versus 38.3 percent.
NBCC (Q2FY18, YoY)
- Revenue down 13.5 percent at Rs 1,328 crore.
- Profit up 14 percent at Rs 78.6 crore.
- EBITDA up 15 percent at Rs 85 crore.
- Margin at 6.4 percent versus 4.8 percent.
Reliance Capital (Q2FY18, YoY)
- Revenue from operation up 7 percent at Rs 5,243 crore.
- Net interest income up 3 percent at Rs 4,255 crore.
- Profit up 39 percent at Rs 352 crore.
- Profit from associates at Rs 57 crore.
Aashiana Housing (Q2FY18, YoY)
- Revenue down 6 percent at Rs 108.5 crore.
- Profit up 9.5 percent at Rs 23 crore.
- EBITDA up 17.3 percent at Rs 30.5 crore.
- Margin at 28.1 percent versus 22.6 percent.
JK Tyres (Q2FY18, YoY)
- Revenue up 7 percent at Rs 2,058 crore.
- Profit down 82.6 percent at Rs 17.4 crore.
- EBITDA down 46 percent at Rs 196 crore.
- Margin at9.5 percent versus 18.9 percent.
Indo Count (Q2FY18, YoY)
- Revenue down 14.4 percent at Rs 493 crore.
- Profit down 43 percent at Rs 36 crore.
- EBITDA down 38 percent at Rs 72 crore.
- Margin at14.6 percent versus 20.1 percent.
MTNL (Q2FY18, YoY)
- Revenue down 12 percent at Rs 642 crore.
- Net loss of Rs 730.6 crore versus loss of Rs 768 crore.
- EBITDA loss at Rs 247 crore versus loss of Rs 279 crore.
- Margin at -38.4 percent versus -38.3 percent.
MEP Infra (Q2FY18, YoY)
- Revenue down 8.5 percent at Rs 409 crore.
- Profit down 89 percent at Rs 6.55 crore.
- EBITDA down 44.5 percent at Rs 186 crore.
- Margin at 45.5 percent versus 74.9 percent.
Eros Media (Q2FY18, YoY)
- Revenue down 44 percent at Rs 268 crore.
- Profit down 12.7 percent at Rs 55 crore.
- EBITDA down 8 percent at Rs 82.5 crore.
- Margin at 30.8 percent versus 18.8 percent.
Corporation Bank (Q2FY18, YoY)
- Net interest income down 1.3 percent at Rs 1,239.5 crore.
- Net loss of Rs 1,035 crore versus profit of Rs 206 crore.
- Provisions for NPA up 68 percent at Rs 2,536 crore (QoQ).
- GNPA at 15.28 percent versus 15.49 percent (QoQ).
- NPA at 10.24 percent versus 11.14 percent (QoQ).
Anant Raj (Q2FY18, YoY)
- Revenue up 0.9 percent at Rs 113 crore.
- Profit down 58 percent at Rs 9 crore.
- EBITDA down 19 percent at Rs 27.5 crore.
- Margin at 24.3 percent versus 30.4 percent.
India Tourism Development Corporation (Q2FY18, YoY)
- Revenue down 4 percent at Rs 71 crore.
- Net loss of Rs 8 crore versus loss of Rs 3 crore.
- EBITDA loss at Rs 14 crore.
- Margin at -19.7 percent versus 7.4 percent.
Gitanjali Gems (Q2FY18, YoY)
- Revenue down 4.4 percent at Rs 3,789 crore.
- Profit up 36 percent at Rs 64.5 crore.
- EBITDA down 39 percent at Rs 123 crore.
- Margin at 3.2 percent versus 5.1 percent.
Stocks To Watch
- Fortis Healthcare looks to buy RHT Heath Trust for a combined enterprise value of approximately Rs 4,650 crore.
- HDIL to divest 60 percent in Ravijyot Finance and Leasing.
- Lupin’s USFDA warning letter lists repeat observations for Indore and Goa plants.
- Laurus Labs gets establishment inspection report (EIR) from USFDA for AP plant.
- HCL Technologies signed a 5-year IT infrastructure services contract with Jardine Lloyd Thompson Group.
- Ujjivan Financial Services clarified that reports of acquisition by another bank are incorrect.
- L&T Infotech to acquire Luxembourg based Syncordis S.A. and Syncordis India for 15 million euros.
- Indoco Remedies: KIFS Enterprises net bought 2.98 lakh shares or 0.3 percent equity stake at Rs 266.38 each.
- eClerx Services: Royal Bank of Scotland sold 2.88 lakh shares or 0.7 percent equity stake at Rs 1270 each.
- Websol Energy System: India Max Investment Fund sold 1.47 lakh shares or 0.6 percent equity stake at Rs 111.55 each.
- Khadim India: Kiduja India bought 2 lakh shares at Rs 730 each.
- Nettle Infrastructure Investment sold 8.3 crore shares or 4.5 percent equity stake at an average of Rs 400.4 each.
- UBS Principal Capital Asia bought 1.7 crore shares or 0.9 percent equity stake at Rs 400 each.
- Harris Insight Emerging Markets Fund bought 1.47 crore shares or 0.8 percent equity stake at Rs 399.98 each.
- Circuit filter revised to 10 percent: Rishiroop, SORIL Infra, Lloyds Steel.
- Circuit filter revised to 5 percent: Tips Industries.
- New India Assurance added to S&P BSE IPO Index.
- Tube Investments last trading day in T group.
Who’s Meeting Whom?
- MCX to meet Sparc Capital and Crestwood Capital on Nov.15.
- Trent to meet Wastach Advisors and Van Eck and Associates on Nov.15, Indus Capital Partners on Nov.17.
- Intrasoft Technologies to meet IDFC Securities on Nov.15.
- Dixon Tech to meet investors from Nov. 15-17.
- Radio City to meet IDFC Securities on Nov. 15.
- Mahindra Lifespace to meet ASK investment on Nov. 15.
Money Market Check
- Rupee closed at 65.41/$ on Tuesday against 65.42/$ on Monday.
- India’s benchmark 10-year bond yield crossed the 7 percent mark on Tuesday, scaling its highest levels since September 2016.
Top Gainers And Losers
- Nifty November futures closed at 10,233.6, premium of 47.6 points versus 44 points.
- November contracts: Nifty open interest down 5 percent; Bank Nifty open interest down 2 percent.
- India VIX closed 0.8 percent higher at 14.1.
- Max open interest for November series at 10,500 Call (open interest at 56.3 lakh, up 2 percent).
- Max open interest for November series at 10,200 Put (open interest at 45.8 lakh, down 7 percent).
- In ban: DHFL, HDIL, Indiabulls Real Estate, India Cement, Infibeam, Jain Irrigtation, JP Associates, JSW Energy, Just Dial, Kaveri Seed.
- New in ban: Kaveri Seed.
- Out of ban: Jet Airways.
Only intraday positions can be taken in stocks which are in F&O ban. In case of rollover of these intraday positions, there is a penalty.
- Nifty PCR at 1.18 versus 1.22
- Nifty Bank PCR at 0.99 versus 1.14
Stocks Seeing High Open Interest Change
Antique on Sun TV
- Initiated ‘Buy’ with price target of Rs 1,070; implying a potential upside of 25 percent from yesterday’s close.
- Says Sun TV set to enter the growth orbit.
- Expect recovery in ad revenue from the second half on company’s renewed focus on market share.
- Expect ad revenue to grow at a compound annual growth rate of 10 percent by March 2020.
- Expect subscription revenue to grow at a compound annual growth rate of 20 percent by March 2020 on commencement of digitisation in Tamil Nadu.
- IPL business to turn profitable and aid margin improvement; operating margin to expand by 200 basis points from the next financial year.
- Expect the stock to re-rate from current levels with earnings a compound annual growth rate of 18 percent by March 2020.
Deutsche Bank on Eicher Motors
- Maintained ‘Buy’; Cut price target to Rs 33,750 from Rs 34,000.
- September quarter results were broadly in-line with estimates.
- Expect volume growth to moderate in the next financial year due to capacity constraints.
- Expect earnings per share to grow at a compound annual growth rate of 29 percent by March 2020.
- Expect Eicher’ revenue growth and margins to outpace volume growth due to pricing power, and increasing share of spare parts/service revenues.
Credit Suisse on Eicher Motors
- Maintained ‘Underperform’; hiked price target to Rs 26,600 from Rs 25,600.
- Previous quarter results were in-line; Margin expansion was below industry.
- New models targeted at international markets, upgrade buyers in India.
- New models production to start by April 2018.
- Will need new models to succeed for current valuations to sustain.
CLSA on Cadila Healthcare
- Downgraded to ‘Underperform’ from ‘Buy’; Cut price target to Rs 480 from Rs 580.
- Cadila’s strong performance in the previous quarter may not recur, as Lialda is likely to face incremental competition in the March ending quarter.
- Lialda competition is likely to result in flat U.S. sales and earnings by March 2020.
- Cut earnigs per share estimates by 3-21 percent for the financial years till March 2020 to factor in September quarter results and earlier-than-expected Lialda competition.
Credit Suisse on Cadila Healthcare
- Maintained ‘Neutral’ with price target of Rs 465.
- Previous quarter was a miss as strong Lialda sales did not translate into strong margins.
- India growth at 15 percent driven by restocking.
- Lialda and Asacol account for one-third of the next financial year earnings and could constrain overall growth.
- Expect financial year ending March 2020 to be flattish compared to the next financial year.
Prabhudas Lilladher on Cadila Healthcare
- Maintained ‘Accumulate’ with price target of Rs 519.
- U.S. and India traction lead to previous quarter surpassing estimates; Sustainability to drive valuation
- Key launches to drive U.S. generic growth in the second half and the next financial year.
- Expect benefits of exclusive launches to significantly improve headline margins.
CLSA on Sun Pharma
- Maintained ‘Sell’; hiked price target to Rs 390 from Rs 370.
- Lack of new launches and continued pricing pressure resulted in sharp U.S. sales decline.
- U.S. sales may be nearing the bottom, there is little visibility of revival.
- New approvals are the key, which would also depend on Halol resolution.
- New launches are important to fill the U.S. void.
- Halol plant inspection outcome will be the key near-term stock catalyst.
Credit Suisse on Sun Pharma
- Maintained ‘Outperform’ with price target of Rs 595.
- Results during the previous quarter were weak impacted by deferred U.S. sales.
- Margins to improve in the second half; Expect Sun to beat margin guidance of 20- 22 percent.
- Sun does not yet have Halol inspection dates but expects it to be in the current quarter.
- Earnings per share cut by 3 percent for the current financial year, driven by weak U.S. sales.
- Demerger of part of Global FZE could sustain lower tax rate.
CLSA on GAIL (India)
- Maintained ‘Sell’ with price target of Rs 405.
- weak petchem business during the previous quarter was offset by strong gas transmission, gas trading and LPG.
- Positive view on GAIL’s gas transmission business but fear expensive long-term U.S. LNG contracts.
- Every $1/mmbtu mismatch equating to $250 million annual risk.
- Stock seems to be ignoring this risk.
Citi on GAIL (India)
- Maintained ‘Neutral’; hiked price target to Rs 510 from Rs 423.
- Higher gas volumes drive operating beat in the previous quarter.
- Gas transmission showed strong QoQ pick-up in volumes and stronger improvement in profitability.
- Raise earnings per share estimates by 16-17 percent for the next two financial years, primarily on higher transmission tariffs.
- U.S. LNG risks abating.
Morgan Stanley on Bank of Baroda
- Maintained ‘Equal-weight’ with price target of Rs 170.
- Previous quarter reported a good net interest income; asset quality was in-line.
- Positives were higher margins and sequential pickup in loan growth.
- Expect gradual recovery in pre-provisioning operating profits, given continued pressure on loan yields and staff cost growth picks up.
- Bank is better placed than peers, given relatively better management and non-performing loan coverage.
UBS on Bank of Baroda
- Maintained ‘Buy’; hiked price target to Rs 230 from Rs 220.
- Strong operating performance was reported in the September quarter while provisions remain high.
- Expect gross non-performing loans to decline to 9 percent in the next financial year.
- Expect credit cost to decline to 1 percent in the next financial year.
- Expect return on equity to improve to 7.3 percent and 11.7 percent in the next financial years.
- Bank better placed than peers’ due to higher provision coverage and improving core franchise.
Credit Suisse on IPCA Laboratories
- Maintained ‘Neutral’ with price target of Rs 550.
- India sales were weak in the previous quarter, but the margins were strong.
- Export formulation sales declined 11 percent year-on-year and were flattish sequentially.
- IPCA can re-start anti-malaria supplies for WHO tender now.