All You Need To Know Going Into Trade On Dec. 18

Asia-Pacific stocks kicked off the penultimate week of the year on a positive note after a Republican agreement on the shape of U.S. tax cuts aimed at boosting growth in the world’s largest economy.

Equity benchmarks climbed from Sydney to Tokyo, after the S&P 500 Index and other American gauges closed at records on Friday.

Back home, it is a big day for the Narendra Modi-led BJP government with election results from two key states, which includes the prime minister’s home turf, due later in the day. (Catch Gujarat Election Results 2017 Live Blog Here and Himachal Pradesh Assembly Election Results 2017 Live Blog Here)

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.5 percent to 10,413.50 as of 6:50 a.m.

Short on time? Well, then listen to this podcast for a quick summary of the article!

Day Break

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

Global Cues

• U.S. stocks rallied to new highs on Friday as investors grew increasingly optimistic that Congress would reach a deal to cut corporate taxes.
• Uncertainty surrounding the fate of U.S. tax reform had investors on edge as they look to the end of a stellar year for equities, with money managers showing signs of dialing back their appetite to take risk.

Europe Check

• The euro posted its third consecutive weekly loss as the ECB remained cautious about the prospects of reaching its inflation goals while reiterating a pledge to keep stimulus in place.
• The pound dropped and yields on U.K. gilts fell to the lowest since September amid speculation Brexit talks are about to get more difficult.

Asian Cues

• Japan’s Topix index rose 0.7 percent, The Nikkei 225 Stock Average up 0.8 percent.
• Australia’s S&P/ASX 200 Index rose 0.6 percent.
• Futures on the S&P 500 Index were up 0.2 percent.
• Contracts on the Hang Seng Index advanced 0.5 percent.

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

• President Donald Trump delivers a national-security speech Monday, when he will call out China for engaging in “economic aggression,” the Financial Times says.
• South Africa’s ruling party delayed its leadership vote to Monday.
• The U.S. and U.K. publish updated estimates of third-quarter GDP
• The Bank of Japan meets to set monetary policy.
• The Czech Republic, Hungary, Taiwan and Thailand also set interest rates this week.
• Nike Inc., FedEx Corp., CarMax Inc., Bed Bath & Beyond, drugstore operator Rite Aid Corp. and Micron Technology Inc. are among companies scheduled to announce earnings.

Commodity Cues

• OPEC crude oil production declined by 133,500 barrels per day in November.
• Brent crude trades higher at $63.26/barrel, up 0.05 percent.
• West Texas Intermediate crude was little changed at $57.40 a barrel.
• Gold was little changed at $1,254.10 an ounce.
• Sugar ended lower for second day at 13.66 cents per pound; down 0.8 percent.

Shanghai Exchange

• Steel snaps three-day losing streak; up 2.08 percent.
• Aluminium trades higher for third day; up 1 percent.
• Zinc trades higher for sixth day; up 1.25 percent.
• Copper trades higher for seventh straight session; up 1.75 percent.
• Rubber trades higher for third day; up 1.2 percent.

Indian ADRs

Sensex Rebalance

• In: Indusind Bank and Yes Bank
• Out: Cipla and Lupin

Stocks to Watch

• KKR, GIC in final lap to invest $2billion in HDFC: BloombergQuint.
• Dish TV Receives Approval From Government For Merger Of Videocon D2H With Co.
• Kesoram Industries to raise Rs 350 crore via issue of convertible warrants on preferential basis to promoter.
• SBI completes transfer of 14 percent stake in SBI cards to GE Capital.
• Govt approves special package for leather and footwear sector.
• Ultratech to seek shareholders approve to raise FII cap to 40 percent from 30 percent.
• E-clerx services to consider buyback of shares on Dec 22.
• Petronet LNG to buy 1.2 million tons/year additional LNG from Exxon Mobil.
• Container Corp of India signs pact with Andhra Pradesh for setting up an integrated logistics and Manufacturing zone.
• ICICI securities files IPO papers with SEBI, to offer up to 6.4 crore shares.
• Quess Corp completes acquisition of 51 percent stake in Trimax Smart Infraprojects.
• RBI increases FII limit from 24 percent to 49 percent in JSW holding.
• Shalimar Paints to raise Rs 50 crore via rights issue. To issue 35.5 lakh shares at Rs 140 per share. Rights entitlement ratio fixed at 6:32.
• L&T Infotech Completes Acquisition Of Syncordis & Subsidiaries.
• Axiscades Engineering says it has completed Phase I acquisition of Mistral solutions.
• JMC Projects secures multiple orders worth Rs 790 crore.
• Weilchensee 884 VV GmbH proposes to acquire majority stake in SQS AG. Acquisition to trigger open offer for the shares of company’s India subsidiary.
• Ramky Infra allots 1.20 crore warrants to promoters and non-promoters.
• RBI imposes fine of Rs 5 crore on Syndicate Bank for non-compliance of KYC norms.
• Jaypee plans to put entire hospitality assets on the block (ET).
• HDFC AMC is said to have hired banks for $300-$600 million IPO (IFR).

Bulk Deals

• Fortis Healthcare: Pensionskasse Des Bundes Publica bought 28.60 lakh shares or 0.6 percent equity at Rs 135.81 each
• Greenply Industries: Reliance MF bought 9.90 lakh shares or 0.8 percent equity at Rs 335 each

Kisan Mouldings

• TCG Fund Fund 1 bought 2.75 lakh shares or 1 percent equity at Rs 136 each
• Madhu Ranchhoddas Mehta sold 3.02 lakh shares or 1 percent equity at Rs 136.13 each

Transpek Industries

• Promoter Ashwin Shroff bought 1.6 lakh shares or 2.9 percent equity at Rs 1,310 each
• Ruchit patel sold 1.60 lakh shares or 2.9 percent equity at Rs 1,310 each

IPO Watch

• Astron Paper & Board Mill IPO gets 94 percent demand for shares offered on first day sale. Offer closes on Dec. 20
• Future Supply Chain Solutions to start trading on BSE/NSE after selling shares at Rs 664 each in IPO that got 7.56 times demand
• ICICI Securities files for public offer of up to 6.44 crore shares

Who’s Meeting Whom

• Mahindra Finance to host a concall with Taiyo Pacific on Dec. 18 and Karvy Stock Broking on Dec. 20.
• Concor to meet Quest Investment Advisor on Dec. 18.
• M&M to meet IIFL private Weatlh on Dec. 18 and Karma Capital Advisors on Dec. 20.
• Tata Chemicals to meet 13 investors like Motilal Oswal, Edelweiss Securities, HSBC Securities and others on Dec. 18.
• Crompton Greaves Consumer to meet Goldman Sachs on Dec. 18, Hornbill Capital on Dec.19 and Eastspring Investments on Dec. 22.
• Tata Motors to meet UBS Securities on Dec. 18 and Philip Capital on Dec. 19.
• Endurance Technologies to meet Macquarie Capital Securities on Dec. 18.

Insider Trades

• Maral Overseas promoter buys over 66 lakh shares on Dec. 13.
• MRF promoter Braga Industries buys 800 shares on Dec. 13.
• Apollo Tyres promoter PTL Enterprises ltd buys 80,000 shares on Dec. 13 - 14.

(As reported on Dec. 15)

Rupee

• Rupee ends at 64.05/$ versus 64.35/$ on Thursday.

Top Gainers And Losers

Index Trends

F&O Cues

• Nifty December Futures closed trade at 10,359, premium of 26 points versus24 points.
• December Futures-Nifty open interest down 6 percent and Bank Nifty open interest down 17 percent.
• India VIX at 14.9, down 9 percent.
• Max open interest for Dec. series at 10,500 Call, open interest at 73.5 lakhs, open interest up 6 percent.
• Max open interest for Dec. series at 10,000 Put, open interest at 91.9 lakh, open interest down 4 percent.

F&O Ban

• In Ban: Fortis, HDIL, Jain Irrigation, JP Associates, JSW Energy, TV18 Broadcast, Wockhardt
• New In Ban: Wockhardt
• Out Of Ban: NIL

Alert: Only intraday positions can be taken in stocks which are in F&O ban, incase of rollover of these intraday positions there is a penalty

Put-Call Ratio

• Nifty PCR at 1.28 versus 1.27
• Nifty Bank PCR at 1.30 versus 1.05

Stocks Seeing High Open Interest Change

Fund Flows

Brokerage Radar

Motilal Oswal on KNR Construction

• Maintained ‘Buy’ with price target of Rs 320.
• Order inflow momentum to pick up from the fourth quarter of the current financial year.
• BOT projects on self-sustaining mode.
• Regulatory hurdles put off annuity project deal with Essel Infra.
• Like KNR for its robust execution track record.
• Positives: strong balance sheet with net debt-equity of 0.1 time and consistent operating margins.

Investec on Inox Leisure

• Maintained ‘Buy’; raised price target to Rs 350 from Rs 320.
• Cost efficiency core DNA; Focus on consumer experience and premiumisation.
• Improved occupancy and realisations – to drive margins/returns.
• Screen addition pipeline intact.

Macquarie on BHEL

• Maintained ‘Underperform’ with price target of Rs 72.
• Order win fails to surprise; Order pipeline beyond L1 remains bleak.
• Expect order intake at Rs 34,000 crore in the next financial year.
• Profitability to remain under pressure in absence of strong revenue growth.
• Expect no reduction in the receivables level.

Goldman Sachs on BHEL

• Maintained ‘Sell’ with price target of Rs 75.
• Expect order wins of Rs 18,000 crore in second half primarily where company is L1.
• Any miss to potentially drive downside to our order-inflow and revenue estimates.
• BHEL trades in line but is expected to generate lowest return on equity in the next financial year.

Macquarie on HUL

• Maintained ‘Outperform’ with price target of Rs 1,402.
• Management suggests a gradual demand recovery in last three months.
• Lower base will help boost volume growth in the current quarter.
• GST rate cuts to have significant positive impact in the medium term.
• Profitability to remain on track despite input cost inflation.
• Investments in Lever Ayush will continue in the second half.
• Higher earnings growth to be driven by margin expansion.
• Expect 250 basis points of margin expansion over by March 2020.
• Expect earnings to grow at a compounded rate of 18 percent by March 2020.
• HUL is top pick in the India Consumer sector.

Credit Suisse on Cement Sector

• Custom duty on Petcoke increased to 10 percent, Could hurt profitability by 4-5 percent.
• Industry should pass on higher petcoke cost.
• Price increase would reduce margin expansion opportunities.

Nomura on HDFC Bank

• Maintained ‘Buy’; raised price target to Rs 2,350 from Rs 2,200
• Expect Rs 18,000 crore capital raise. Capital raise to add 12 percent to the next financial year’s book.
• Expect faster earning growth over the next three years.
• Normalisation of demonitisation and GST key trigger to earnings growth.
• HDFC Bank remains top pick among large caps.

HSBC on Dalmia Bharat

• Maintained ‘Buy’; raised price target to Rs 3,400 from Rs 2,910.
• Dalmia Bharat maintained robust profitability despite volume moderation.
• Volumes moderated in the first half but remain better than industry.
• Expect strong earnings per share of 55 percent compounded rate by March 2020.
• Strong earnings to support valuations.
• Time is apt to pursue organic as well as inorganic expansion.