All You Need To Know Going Into Trade On December 1
Asian stocks erased early gains and S&P 500 Index futures declined as the U.S. tax bill encountered stumbling blocks.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.2 percent to 10,258.50 as of 6:45 a.m.
Short on time? Well, then listen to this podcast for a quick summary of the article!
Here’s a quick look at all that could influence equities on Friday.
- Republican Senator John McCain backed the Senate tax bill, but the Republican Party leadership suspended vote on the bill to Friday morning due to the collapse of a key compromise to win a majority for a Senate tax overhaul.
- The Dow Jones Industrial Average climbed above 24,000, and the S&P 500 Index capped its longest monthly winning streak since 2007.
- Technology shares recovered from their worst selloff in more than a year.
- The Stoxx Europe 600 Index fell 0.3 percent.
- The U.K.’s FTSE 100 Index dropped 0.9 percent.
- The Topix index climbed 0.7 percent. The Nikkei 225 Stock Average gained 0.8 percent.
- Australia’s S&P/ASX 200 Index advanced 0.6 percent.
- The MSCI Asia Pacific Index rose 0.2 percent. The MSCI Emerging Market Index dipped 1.9 percent, the most since May.
Here are some key events coming up today:
- Manufacturing in the U.S. probably remained robust in November. The Institute for Supply Management’s index is settling back to a more sustainable pace after climbing to a 13-year high two months earlier in the aftermath of Hurricane Harvey.
- St. Louis Fed President James Bullard and Dallas Fed President Robert Kaplan are scheduled to speak.
- Markets in Indonesia, Malaysia, Pakistan and Sri Lanka are closed for holidays.
- OPEC and its allies outside the group agreed to maintain oil production cuts until the end of 2018.
- West Texas Intermediate was little changed at $57.31 a barrel.
- Gold declined 0.7 percent to $1,277.20 an ounce.
- Steel snaps four-day winning streak; down 0.05 percent.
- Aluminium snaps three-day losing streak; up 0.28 percent.
- Zinc snaps five-day losing streak; up 0.73 percent.
- Copper trades lower for fourth day, down 0.17 percent.
- Rubber trades lower; down 0.47 percent.
- Mahindra Logistics
- 8K Miles Software
- Setco Automotive
- Pondy Oxides
- Vimta Labs
- Yash Papers
Cerebra Integrated Technologies (Q2, QoQ)
- Revenue up 71 percent at Rs 60 crore.
- Net profit up 63 percent at Rs 7 crore.
- EBIT up 42 percent at Rs 7.4 crore.
- Margin at 12.3 percent versus 14.9 percent.
Shreyans Industries (Q2, YoY)
- Revenue up 8 percent at Rs 107.6 crore.
- Net profit up 14 percent at Rs 7.3 crore.
- EBITDA down 8 percent at Rs 12.7 crore.
- Margin at 11.8 percent versus 13.9 percent.
UFO Moviez (Q2, YoY)
- Revenue down 13 percent at Rs 139 crore.
- Net profit down 43.5 percent at Rs 11.3 crore.
- EBITDA down 31 percent at Rs 38 crore.
- Margin at 27.3 percent versus 34.6 percent.
Warren Tea (Q2, YoY)
- Revenue up 33 percent at Rs 44 crore.
- Net profit up 10 percent at Rs 14.6 crore.
- EBITDA up 18 percent at Rs 16 crore.
- Margin at 36.4 percent versus 41.2 percent.
Stocks To Watch
- India’s GDP growth rises to 6.3 percent year-on-year in the September quarter.
- HDFC to dilute stake in asset management unit via IPO. To hold 50.01 percent stake in the AMC business post stake dilution. Standard Life to hold 24.99 percent.
- Mahindra & Mahindra Financial Services opened QIP on Nov. 30, to raise up to Rs 1,056 crore at a floor price of Rs 439.63.
- Yes Bank says Moody’s assigns Baa3 rating to its $1 billion MTN program.
- LT Foods to strengthen presence in European market. Plans to invest $20 million for overall branding and expansion.
- Reliance Communications says 31 foreign and Indian lenders oppose China Development Bank’s insolvency plea.
- Reliance Power executes Phase I of 750 MW LNG power project in Bangladesh.
- Shilpa Medicare says NCLT approves scheme of merger of Navya Biologicals with self.
- Laurus Labs receives maiden tentative approval from U.S. FDA for Tenofovir Disoproxil Fumarate tablets. Drug is used for the treatment of HIV-1 infection in adults and pediatric patients 2 years of age and under.
- Mirza International receives MCA approval for scheme of merger between Hi-Life Fabricators and self.
- Thomas Cook opens two gold circle partner franchise outlets in Pune.
- MCX completed first settlement cycle in options contract on gold futures.
- Reliance Naval and Engineering said that there is no merit in IFCI application to the NCLT as it is an unsecured creditor.
- LIC to pare stake in Bank of Baroda to 5.2 percent from 7.2 percent.
- Asian Granito: Vignaharta Ceramics LLP sold 5 lakh shares or 1.7 percent stake at Rs 500 each.
- Filatex Holdings: Savita Holdings Pvt sold 3 lakh shares or 0.7 percent stake at Rs 225.05 each.
- Technofab Engineering: Equipment Mgmt sold 1.4 lakh shares or 1.3 percent stake at Rs 302 each.
- Petronet LNG: Integrated Core Strategies (Asia) PTE sold 80.34 lakh shares or 0.5 percent stake at Rs 251.37 each.
- SRG Housing Finance: Promoter Vinod Jain HUF bought 71,000 shares or 0.5 percent stake at Rs 229.25 each.
- Agro Tech Foods: Samsung India Securities Master Investment Trust bought 2 lakh shares or 0.8 percent stake at Rs 620.93 each.
- Promoter Kamal Kishore Baheti sold 1 crore shares or 9.1 percent stake at Rs 205.26 each.
- Nomura Trust and Banking Co bought 60.58 lakh shares or 5.53 percent stake at Rs 205.08 each.
- Nomura Funds Ireland India Equity bought 23.13 lakh shares or 2.11 percent stake at Rs 205.09 each.
- Reliance Capital bought 5 lakh shares or 1.3 percent stake at Rs 910 each.
- Baring India Private Equity Fund III Listed Investments sold 5 lakh shares or 1.3 percent stake at Rs 910 each.
- Nordea 1 Sicav bought 9.74 lakh shares or 0.7 percent stake at Rs 1103.25 each.
- MSCI Equity Index Fund B India sold 8.47 lakh shares or 0.6 percent stake at Rs 1107.49 each.
- Societe Generale bought 21 lakh shares or 3.1 percent stake at Rs 416.96 each.
- Paragon Partners Growth Fund sold 21 lakh shares or 3.1 percent stake at Rs 417 each.
- DB International Asia sold 47.26 lakh shares or 0.9 percent stake at Rs 709.5 each.
- Integrated Core Strategies (Asia) PTE sold 39.44 lakh shares or 0.7 percent stake at Rs 712.5 each.
Who’s Meeting Whom?
- TCS to meet JP Morgan Asset Management on Dec. 7.
- Escorts to participate in Edelweiss conference on Dec. 4.
- Ashoka Buildcon to meet Kotak AMC, Somerset Capital and others on Dec. 1.
- Info Edge to meet investors & participate in conferences from Dec. 1–5.
- Mahanagar Gas to meet Burgundy AMC on Dec. 4 and Marshall Wace on Dec. 13.
- PSP Projects to meet SBI MF, ICICI Sec & other investors from Dec. 1–7.
- Voltas to meet IIFL, SBI Caps, JP Morgan on Dec. 1 and Franklin Templeton on Dec. 12
- Sun Pharma revokes pledge of 1 crore shares on Nov. 27.
- Kirloskar Brothers promoter bought 25,000 shares on Nov. 28.
- Lupin promoters bought 1 lakh shares from Nov. 28–29.
- Adani Power promoter bought 30 lakh shares on Nov. 29.
- Power Mech Projects promoter sold over 24,000 shares on Nov. 27.
- V-Guard promoter sold 30 lakh shares on Nov. 29.
- Asian Granito promoter sold over 18,000 shares from Nov. 27–29.
- Relaxo Footwear promoter sold over 6.5 lakh shares on Nov. 29.
- Jubliant Life Sciences promoter creates pledge of over 10 lakh shares on Nov. 29.
- Vista Pharma promoter bought 15 lakh shares on Nov. 28.
- Rupee closed at 64.46/$ on Thursday from 64.32/$ on Wednesday
- Currency markets are shut today on account of Eid-e-Milad
Top Gainers And Losers
- Nifty December Futures trading at 10,278.6, premium of 52 points versus 38 points on Wednesday.
- Nifty open interest up 8 percent; Bank Nifty open interest up 6 percent.
- Rollover: Nifty at 63 percent, Bank Nifty at 55 percent.
- India VIX closed 3.7 percent up at 13.5.
- Maximum open interest for Dec. series at 10,500 Call (open interest at 49.5 lakh, open interest up 73 percent).
- Maximum open interest for Dec. series at 10,000 Put (open interest at 69.31 lakh, up 14 percent).
- No securities in ban
- Nifty PCR at 1.32 from 1.27.
- Nifty Bank PCR at 0.92 from 1.01.
Stocks Seeing High Open Interest Change
November Auto Sales
Indian automakers are expected to report double digit sales growth in the month of November, according to a BloombergQuint poll of three brokerages.
Maruti Suzuki's sales are seen rising 15 percent, while rivals M&M, Tata Motors and Ashok Leyland are all seen clocking sales growth of over 30 percent. The rise in sales is driven largely by the low base effect, as the Narendra Modi government demonetised Rs 500 and Rs 1,000 notes in November 2016.
Two-wheelers too are expected to clock robust year-on-year sales growth, with Bajaj Auto likely to clock 31 percent growth in sales. Market leader Hero MotoCorp is likely to lag rivals, with sales rising 18 percent.
Here’s what brokerages had to say:
Motilal Oswal On November Auto Sales
- Retails momentum mixed for two-wheelers and commercial vehicles; passenger vehicle segment healthy.
- Healthy wedding season demand partially negated by untimely rains.
- Demand momentum in rural markets continues to be healthy.
- Hero outperformed in motorcycles, capitalizing on healthy wedding season demand in North India.
- Maruti continues to see better retail sales than competitors; Tata too is gaining momentum.
- Demand for commercial vehicles is not exciting; discounts increased sequentially.
- Prefer four-wheelers over two-wheelers and commercial vehicles due to stronger volume growth and stable competitive environment.
- Top Picks: Maruti, Bajaj Auto, Tata Motors and Amara Raja.
- M&M as the best bet on a rural market recovery.
Nomura On November Auto Sales
- Low base of demonetisation to drive strong growth for medium and heavy commercial vehicles, followed by two-wheelers and passenger vehicles.
- Expect passenger vehicle industry to report 16 percent year-on-year growth.
- Maruti to outperform the industry with 17 percent growth.
- Medium and heavy commercial vehicle segment and two-wheeler segment to grow 34 percent and 24 percent respectively year-on-year.
- Medium and heavy commercial vehicle segment: Ashok Leyland, Tata Motors and Eicher Motors’ volume to grow 23 percent, 35 percent and 26 percent respectively on a yearly basis.
- Two-wheeler segment: Hero MotoCorp, Bajaj Auto and Eicher Motors’ volume to grow 21 percent, 35 percent and 27 percent respectively on a yearly basis.
Ventura Securities On Talwalkars Better Value Fitness
- Initiated ‘Buy’ rating with price target of Rs 728; implying a potential upside of of 173 percent over 24 months.
- Talwalkars is the market leader and twice as large as the next best peer.
- Fitness industry offers a huge opportunity.
- Sound business strategy to expand and transform into a wellness brand.
- Demerger to bring superior return to the gym company leading to sharp re-rating.
- Expect gym company to grow its revenue, operating income and net profit at 19 percent, 21.6 percent and 25.8 percent respectively by March 2020.
- Expect lifestyle company to grow revenue, operating income and net profit at 11.2 percent, 12.8 percent and 11.3 percent by March 2020.
- Significant scope for further re-rating given its dominant position and under-penetrated market.
Nomura On IndusInd Bank
- Maintained ‘Buy’; raised price target to Rs 1,950 from Rs 1,850.
- Growth robust - expect no impact from PSU recapitalisation.
- Bank continues to build on niche verticals.
- Bharat Financial acquisition to increases bank's rural presence.
- Expect return on equity improvement improvement through cost efficiency; Bank targets 200 basis points cost income reduction by March 2020.
- Expects credit costs to remain at 65 basis points for the current financial year. It is likely to come down to 60 basis points by March 2019.
Edelweiss On Pharma Sector
- U.S. drug pricing probe is bringing several more companies and products into its purview.
- The charges include fixing prices and rigging bids.
- Indian companies impacted: Sun Pharma, Aurobindo, Zydus, Dr. Reddy’s and Glenmark.
- High probability that these companies will be charged penalties.
- If allegations proved, companies may be prosecuted criminally, with fines up to twice the amount of gain or loss involved.
CLSA On Maruti
- Maintained ‘Buy’ with price target of Rs 10,000.
- India passenger vehicle industry showing signs of easing competitive intensity.
- Easing competitive intensity, in small cars and entry sedans, is positive for Maruti.
- More Original Equipment Manufacturers could potentially enter India but unlikely to make a dent .
- Maruti likely to broaden its sport utility vehicle portfolio in coming years, though competition is high.
- Valuations seem rich, but justified given high earnings visibility and improving outlook.
Credit Suisse On Escorts
- Initiated ‘Outperform’ rating and price target of Rs 900; implying a potential upside of 26 percent from yesterday’s close.
- Escorts is fourth-largest tractor manufacturer with niche construction equipment and railways business.
- Tractors account about 80 percent of revenues and 95 percent of profits.
- Expect tractor growth cycle to remain strong for another two years.
- Tractors volumes to grow at compound annual growth rate of 11 percent by March 2021.
- Expect tractor operating margins to improve by 400 basis points to 14 percent by March 2020.
- Escorts’ has best earnings growth and lowest valuation multiple among auto original equipment manufacturers.
- Expect fast top-line growth at railways and margins turnaround in construction equipment division.
Also Read: Indian Economy Recovers In Q2, But Slowly
Brokerages On India’s Q2 GDP
- Growth accelerated in September quarter, in line with expectations.
- India’s real GDP growth recovery led by higher growth in fixed investment is encouraging.
- There are still some headwinds to activity due to uncertainties around GST.
- Expect solid growth momentum next year and forecast real GDP growth of 8 percent in the next fiscal.
- GDP growth recovered in September quarter largely due to GST related restocking.
- Remain constructive on second half’s growth on recovery in private consumption, and improving global growth momentum.
- Expect full-year growth to disappoint consensus due to continued disruptions from GST and higher oil prices.
- Expect inflation to stay in RBI’s target range in the second half as we expect impact of higher oil prices.
- Continue to expect the RBI to cut rates by 25 basis points in first quarter of 2018.
- GDP growth in the September quarter indicates that the economy has started to stabilize at a modest pace.
- Expect growth to average around 6.6 percent during the current financial year.
- Optimistic about the outlook for the next financial year and beyond.
- Reasonable to expect growth to return close to 8 percent by March 2020.
- Do not expect RBI to cut rates any further.