Employees pass though a security check at the National Stock Exchange (NSE) in Mumbai, India (Photographer: Dhiraj Singh/Bloomberg)  

All You Need To Know Going To Trade On Dec. 14

Asian stocks opened mixed and the dollar maintained losses following a more tempered view on growth and inflation from the Federal Reserve that pushed Treasury yields lower.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.6 percent to 10,284 as of 6:40 a.m.

Day Break

Global Cues

  • Most U.S. stocks ended higher, Treasuries rose and the dollar slipped for the first time in five day son Wednesday on the Fed’s widely anticipated announcement that it was hiking rates by a quarter of a percentage point amid rising optimism in the economy.
  • The small-cap Russell 2000 Index, whose members’ fortunes are most closely tied to economic gains, was the strongest performing equity gauge.

Europe Check

  • The European Central Bank is expected to reveal details of plans to taper asset purchases on Thursday.
  • Comments on the outlook for 2018 will be the focus for investors as they weigh the impact of coming policy normalisation on global asset prices.

Asian Cues

  • The Topix index was down 0.1 percent, and the Nikkei 225 Stock Average was little changed.
  • Australia’s S&P/ASX 200 Index rose 0.2 percent and the Kospi index in Seoul was up 0.6 percent.
  • Futures on the S&P 500 rose less than 0.1 percent.
  • Futures on Hong Kong’s Hang Seng Index rose 0.3 percent.

Here are some of the key events scheduled for this week:

  • The ECB, Bank of England and Swiss National Bank set monetary policy at their respective meetings on Thursday.
  • Australia’s November jobs report is due on Thursday.
  • China updates on November factory output and retail sales on Thursday. Factory output probably gained 6.1 percent from a year earlier, while retail sales growth is expected to have picked up to 10.3 percent.
  • U.S. retail sales data is due on Thursday.
  • European lawmakers continue to debate Brexit and weigh moves on the next step, while North America Free Trade Agreement negotiators meet again.

Commodity Cues

  • Brent crude ended lower at $62.44/barrel, down 1.4 percent.
  • West Texas Intermediate crude rose 0.4 percent to $56.82 a barrel.
  • Gold lost 0.1 percent to $1,254.21 an ounce.
  • Sugar snapped six-day losing streak, ender higher at 13.85 cents per pound; up 0.6 percent.

Shanghai Exchange

  • Steel trades lower for second day; down 0.1 percent.
  • Aluminium trades flat.
  • Zinc trades higher for fourth day; up 0.08 percent.
  • Copper trades higher for fifth day; up 0.7 percent.
  • Rubber trades lower for second day; down 0.3 percent.

Indian ADRs

Earnings To Watch

  • Atlas Cycles
  • Goodluck India
  • Gufic Bio
  • JBM Auto
  • Kopran
  • Lawreshwar Polymers
  • Linc Pens
  • Lovable Lingerie
  • OK Play
  • Sree Rayalaseema Hi-Stength Hyp
  • Stylam Industries
  • Veto Switchgear

Earnings Reaction To Watch

Bodal Chemicals (Q2, YoY)

  • Revenue down 23 percent at Rs 262.5 crore.
  • Net profit down 28 percent at Rs 26 crore.
  • EBITDA down 18 percent at Rs 46.5 crore.
  • Margin at 17.7 percent from 16.7 percent.

Prataap Snacks (Q2, YoY)

  • Revenue up 11 percent at Rs 264 crore.
  • Net profit up 143 percent at Rs 12.9 crore.
  • EBITDA up 148 percent at Rs 26 crore.
  • Margin at 9.8 percent from 4.4 percent.

Stocks To Watch

  • Tata Communications to transfer surplus land to Hemisphere Properties which will be subsequently listed.
  • Interglobe Aviation offer for sale to non-retail investors gets subscribed 1.12 times
  • PVR signs pact with CJ 4DPLEX to launch another 16 4DX screens in India.
  • UCO Bank sold Jai Balaji loan to Edelweiss ARC.
  • NCC to raise Rs 550 crore via QIP.
  • RBI imposes penalty of Rs 3 crore on IndusInd Bank for non-compliance with IRAC norms.
  • Corporation Bank says RBI has placed the lender under Prompt Corrective Action framework for high NPAs.
  • RBI increases Manpasand Beverages’ FII limit to 49 percent from 24 percent and allows further FII buying.
  • IVRCL, Ruchi Soya, Orchid Pharma and Jaiprakash Associates part of RBI’s second list of defaulters (Mint).
  • Maruti Suzuki to raise vehicle prices by 2 percent from January (PTI).

Bulk Deals

V2 Retail

  • Goldman Sachs India bought 9.54 lakh shares or 2.8 percent equity at an average of Rs 502 each.
  • Naresh Bhargava sold 4.50 lakh shares or 1.3 percent equity at Rs 500 each.
  • Vivek Lodha sold 4.50 lakh shares or 1.3 percent equity at Rs 500.79 each.
  • Pramod Chand Mahnot sold 7 lakh shares or 2.1 percent equity at Rs 502.59 each.

Shriram Transport Finance

  • Societe Generale bought 15 lakh shares or 0.7 percent equity at Rs 1362.50 each.
  • Morgan Stanley France S.A.S sold 15 lakh shares or 0.7 percent equity at Rs 1362.50 each.

Who’s Meeting Whom

  • IIFL to meet Manulife Asset Management on Dec. 14.
  • Blue Star to meet Amiral Gestion on Dec. 14.
  • Crompton Greaves consumer to meet Kotak MF, Birla Life Insurance and Prince Street Capital Management on Dec. 14.
  • Pidilite to meet JP Morgan and Kotak Securities on Dec. 14.
  • PI Industries to meet Mirae Asset Management on Dec. 14.
  • Rallis to meet HDFC Life Insurance on Dec. 14.

Insider Trades

  • Reliance Capital promoter revokes 37.7 lakh shares from pledge on Dec. 11.
  • PTL Enterprises bought 60,000 Apollo Tyres shares on Dec. 12.
  • Byke Hospitality promoter bought 59,000 shares on Dec. 12.

Rupee

  • Rupee closed at 64.44/$ on Wednesday from 64.40/$ on Tuesday.

Top Gainers And Losers

Index Trends

F&O Cues

  • Nifty December Futures trading at 10,215, premium of 22 points from 24 points.
  • Open interest unchanged for Nifty and Bank Nifty Futures of December contract
  • India VIX closed up 4.4 percent at 15.9.
  • Max open interest for Dec. series at 10,500 Call (open interest at 63.4 lakh, up 9 percent).
  • Max open interest for Dec. series at 10,000 Put (open interest at 85.6 lakh, down 6 percent).

F&O Ban

In ban: Fortis, HDIL, IRB Infrastructure, Jet Airways, Jain Irrigation, JP Associates and JSW Energy

Only intraday positions can be taken in stocks which are in F&O ban. In case of a rollover of these intraday positions, there is a penalty.

Put-Call Ratio

  • Nifty PCR at 1.25 from 1.26.
  • Nifty Bank PCR at 0.87 from 1.08.

Stocks Seeing High Open Interest Change

Fund Flows

Brokerage Radar

Credit Suisse on S Chand

  • Initiated ‘Outperform’ with price target of Rs 625.
  • S Chand is the largest player in this market and with a strong track record.
  • Leading player in attractive Indian education content market
  • Expect compounded growth rate of 14 percent, 13 percent and 25 percent for revenue, operating income and earnings per share by March 2020.
  • Lower borrowing cost and tax rate to accelerate earnings per share.
  • Management looking at two acquisitions in Western India state board and Cambridge international board.
  • Positives: large and young population, growth of private schools and increasing share of education in consumers' discretionary budget.

Motilal Oswal on Oberoi Realty

  • Initiated ‘Buy’ with price target of Rs 580.
  • Sharp focus and trusted brand are the key strengths.
  • Company to be a key beneficiary of likely consolidation post RERA.
  • Annuity business – portfolio expansion to provide consistent cash flows.
  • Recent foray into affordable housing should help it enjoy tax incentives.
  • Low net debt provides ample room to acquire large land parcels in the Mumbai.
  • Expect revenue and net profit to grow at a compounded rate of 47 percent and 56 percent respectively by March 2020.
  • High operating margins to be backed by premium pricing.
  • Strong cash flow visibility for 10-12 years from ongoing/planned projects.
  • Bull case price target of Rs 638.

Ventura on Everest Industries

  • Initiated ‘Buy’ with price target of Rs 712.
  • Government policies to promote housing sector is positive.
  • Boards and Panels segment to lead to better profitability.
  • Roofing - new product launches to maintain growth momentum.
  • Change in product mix to boost profitability; To reduce dependence on roofing.
  • Expect revenue, operating income and net profit to grow at a compounded rate of 11 percent, 53 percent and 173 percent by March 2020.
  • Benefits from low base of previous financial year, which was impacted by demonetisation and high material costs.
  • Margin expansion and debt repayment to boost return ratios.

IDFC Securities on Tata Communications

  • Maintained ‘Underperformer’ with price target of Rs 655.
  • Approval for de-merger of surplus land is a positive.
  • Market has been expecting an announcement in this regard.
  • Stock price partially reflecting the value of de-merged entity.
  • Would be sellers in the land-related rally.

CLSA on ONGC

  • Maintained ‘Buy’ with price target of Rs 225.
  • Fears of overpaying in HPCL deal has made ONGC underperform.
  • Stock already building worst case on HPCL acquisition.
  • Using Oil India as a benchmark, ONGC stock should be 25 percent higher.
  • ONGC pricing in $9 billion value leakage due to HPCL acquisition.
  • Using spot Brent of US$65/bbl, we estimate upside of 29 percent.

Goldman Sachs on Hero MotoCorp

  • Upgraded to ‘Neutral’ from ‘Sell’; maintained price target of Rs 3,295.
  • Added Hero to Sell List on December 2014.
  • The risk reward is more balanced now at current levels.
  • New launches hold the key for the company in the medium to long term.
  • Expect volume and revenue to grow at a compounded rate of 7 percent by March 2020.

Macquarie on IndusInd Bank

  • Monetary impact of penalty is negligible; May remain an overhang on valuations.
  • Penalty pertains to an inspection of financial position as of financial year-ended March 2016.
  • Compliance has become more important for banks of late.
  • Issue may remain overhang for the stock, if it reports large divergences for the previous financial year as well.
  • Results of RBI audit likely to be announced with the current quarter results.

HSBC on Sun TV

  • Maintained ‘Reduce’; raised price target to Rs 800 from Rs 730.
  • Markets not pricing potential structural risks.
  • Near term growth prospects look good, but less comfort on medium-term profitability.
  • Sun faces tough competition from Star India.
  • Spending may increase for Sun if competition continues.
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