Stocks in Asia opened lower after U.S. equities dipped in the wake of congressional passage of U.S. tax cuts, suggesting investors see the growth-boost narrative from the corporate and individual rate reductions as having played out.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.2 percent to 10,446.50 as of 6:50 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 Thursday.
- U.S. stocks fluctuated while Treasury yields climbed to a nine-month peak as the Republican tax overhaul passed its final vote before going to President Donald Trump for his signature.
- The U.S. Senate approved the tax-cut legislation in a party-line vote and the House of Representatives passed the bill after a re-vote, bringing Trump to the brink of his first major legislative victory. The bill itself will be signed at a later date.
- Core European bond yields followed Treasury rates higher, with European Central Bank asset purchases for the year ending Thursday.
- Tech shares led the Stoxx Europe 600 Index to its biggest decline in almost three weeks, with Spanish equities underperforming before Thursday’s Catalan poll.
- Japan’s Topix Index fell 0.2 percent. The Nikkei 225 Stock Average declined 0.3 percent.
- Futures on the S&P 500 Index were up less than 0.1 percent after the underlying gauge slid 0.1 percent to 2,679.25 Wednesday.
- Australia’s S&P/ASX 200 Index was down 0.3 percent.
- Futures on Hong Kong’s Hang Seng Index fell 0.2 percent.
Here are some of the key events scheduled for this week:
- The U.S. and U.K. publish updated estimates of third-quarter GDP.
- The Bank of Japan meets on Thursday to set monetary policy.
- Catalonia votes in an election Thursday that will pose a test for the Spanish region’s secession movement.
- Brent crude ended higher at $64.56 a barrel, up 1.2 percent.
- WTI crude ended higher at $58.05 a barrel, up 0.9 percent.
- Spot Gold trades higher at $1,266 an ounce; up 0.07 percent.
- ICE Sugar ended higher for third day at 14.57 cents per pound; up 1.11 percent.
- Steel trades higher; up 1.7 percent.
- Aluminium trades higher for second day; up 0.7 percent.
- Zinc trades higher for second day; up 0.4 percent.
- Copper trades higher for tenth straight session; up 1.2 percent.
- Rubber trades lower; down 0.2 percent.
Stocks To Watch
- Dalmia Bharat to acquire bankrupt Murli Industries for Rs 350 crore (Economic Times)
- RIL-owned Reliance Jio Infocomm has emerged the front-runner to acquire the assets of debt-ridden Reliance Communications (RCom) (Business Line)
- Reliance Communication lenders are said to meet as early as this week to decide on converting part of the debt owed to them into equity (Bloomberg)
- Bharti Airtel: Tanzanian government said Airtel’s local unit belongs to state-owned Tanzania Telecommunications Company.
- Bharat Petroleum: Government is yet to take a decision on BPCL’s proposal to integrate with either GAIL India or Oil India, Oil Minister Dharmendra Pradhan said.
- IVRCL entered into a pact with Cube Highways and Infrastructure to sell two arms for Rs 730 crore.
- Coal India is looking to buy stake in overseas coking coal mines.
- SEBI ordered forensic audit of Pincon Spirit.
- Srikalahasthi Pipes’ QIP opens at a floor price of Rs 379.3 per share.
- Kridhan Infra QIP opens at a floor price of Rs 102.82 per share.
- United Bank of India: RBI prescribed additional Prompt Corrective Action.
- Cabinet approves Rs 1,300 crore programme for textile sector.
- Pidilite to consider share buyback on Dec. 26.
- SQS India: Assystem Services made an open offer to acquire 27.82 lakh shares, or 26 percent stake at Rs 475.27 each.
- Varun Beverages to acquire PepsiCo India’s franchised sub territory in Jharkhand.
- TPL Plastech: Bridge India Fund bought 4.5 lakh shares or 5.8 percent equity at Rs 650 each.
- Asian Granito: Vignaharta Ceramics sold 1.86 lakh shares or 0.6 percent equity at Rs 530.14 each.
- Tara Jewels: Promoter Rajeev Sheth sold 4.61 lakh shares or 1.9 percent equity at Rs 18.9 each.
- SBI MF bought 17.77 lakh shares or 1.7 percent equity at Rs 165.79 each.
- Ashish Kacholia sold 9.10 lakh shares or 0.9 percent equity at Rs 167 each.
- Idria sold 16.83 lakh shares or 1.6 percent equity at Rs 165.77 each.
- Goldman Sachs EM Equity Fund sold 9.8 lakh shares or 1 percent equity at Rs 165 each
- UBS Principal Capital Asia bought 46.34 lakh shares or 1.6 percent equity at Rs 43.67 each.
- Moon Capital Trading bought 2.09 crore shares or 7 percent equity at Rs 43.65 each.
- Swiss Finance Corporation sold 2.55 crore shares or 8.6 percent equity at Rs 43.65 each.
- Promoter Anshul Specialty molecules bought 55,000 shares or 1 percent equity at Rs 1,372 each.
- Ruchit Patel sold 55,000 shares or 1 percent equity at Rs 1,372 each.
- Moon Capital Trading bought 1.25 crore shares or 1.4 percent equity at Rs 26.1 each.
- Swiss Finance Corporation sold 1.25 crore shares or 1.4 percent equity at Rs 26.1 each.
Shaily Engineering Plastics
- HDFC MF bought 2.43 lakh shares or 2.9 percent stake at Rs 900 each.
- Promoters sell 2.50 lakh shares or 3 percent stake at Rs 900 each.
- Bombay Rayon Fashions, OK Play & Mirc Electronics circuit filter revised to 5 percent.
- Pincon Spirits Promoters & Directos only allowed to buy shares and not sell or transfer until further notice.
- DPSC Two day offer for sale starts today.
- Balkrishna Industries: Ex-date for 1:1 bonus. F&O lot size revised to 800.
- Castrol: Ex-date for 1:1 bonus. F&O lot size revised to 2,800.
- M&M: Ex-date for 1:1 bonus. F&O lot size revised to 1,000.
- Vakrangee: Ex-date for 1:1 bonus.
- Astron Paper & Board Mill subscribed 242 times on final day
Who’s Meeting Whom
- Mahindra Holidays to meet Anand rathi and JHS Securties on Dec. 21.
- M&M to meet IIFL, Trinity Asset Management on Dec. 22 and Sharekhan on Dec. 26.
- TNPL to meet SBI MF, UTI MF, Reliance MF and others on Dec. 21-22.
- Shriram City to meet Motilal Oswal on Dec. 21.
- Prozone Intu Properties promoter sold 60,000 shares on Dec. 18
- Digjam promoter sold 2 lakh shares between Dec. 14-19
- Rupee closed at 64.11/$ on Wednesday from 64.04/$ on Tuesday.
Top Gainers And Losers
- Nifty December futures closed trade at 10,470, premium of 26 points versus 7.9 points on Tuesday.
- December Futures: Nifty open interest down 1 percent; Bank Nifty open interest down 6 percent.
- India VIX closed flat 12.18.
- Maximum open interest for December series at 10,500 Call (open interest at 65.2 lakh, up 4 percent.)
- Maximum open interest for December series at 10,000 Put (open interest at 80.5 lakh, down 3 percent.)
- In ban: Balrampur Chini, DLF, Fortis, HDIL, Jet Airways, JP Associates, JSW Energy
- New in ban: Balrampur Chini, DLF
- Out of ban: TV18 Broadcast, Wockhardt
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.
- Nifty PCR at 1.49 versus 1.44.
- Nifty Bank PCR at 1.07 versus 1.22.
Stocks Seeing High Open Interest Change
CLSA on Reliance Nippon Life AMC
- Initiated ‘Buy’ with price target of Rs 325.
- Mutual funds in a sweet spot with rising penetration.
- Robust earnings growth and high dividend payouts to aid investor returns.
- Expect asset under management, revenue and net profit to grow at a compounded rate of 23 percent, 28 percent and 26 percent respectively by March 2020.
- Dividend yield to rise to 3.1 percent by the next financial year versus 1.6 percent clocked during the previous financial year.
- Reliance Nippon to leverage retail strength.
- Topline growth largely driven by rise in share of equity.
- Equity share in asset under management to rise to 40 percent by March 2020 versus 28 percent in March 2017.
- Cost of operations to remain high.
Motilal Oswal on Ajanta Pharma
- Maintained ‘Buy’; raised price target to Rs 1,790 from Rs 1,606.
- Company confident on returning to growth path from the next financial year.
- Company maintains guidance of 10-15 filings by March.
- Inventory has been gradually restoring post GST.
- Expect improvement in business environment in emerging markets.
- Expect revenue and net profit to grow at a compounded rate of 14 percent and 11 percent respectively by March 2020.
- Strong filing pace to enable better performance over medium term in U.S.
Morgan Stanley on HDFC Standard Life
- Initiated ‘Overweight’ with price target of Rs 425.
- HDFC Life is one of the best plays on India's protection story.
- One of the strongest distribution franchises; Relies heavily on HDFC Bank.
- Specializes in protection – an underpenetrated and highly profitable segment.
- Superior franchise to drive steady growth.
- Improvement in revenue mix to offset margin pressure.
- Expect protection premiums to grow at a compounded rate of 44 percent by March 2020, and 20 percent between March 2020 and March 2030.
- Expect return on enterprise value to sustain at 20 percent over the next three years.
- Expect value of new business to grow at a compounded rate CAGR of 28 percent by March 2020.
- Near-term upside is limited following strong listing.
- Bull case price target of Rs 580: Strong growth, significant improvement in persistency and stronger-than expected performance on protection.
Morgan Stanley on HDFC Bank
- Maintained ‘Overweight’; raised price target to Rs 2,500 from Rs 2,200.
- Fund raising to raise current fiscals CET-1 to 15.3 percent and the next financial year’s book value by 15 percent.
- Bank well placed to show strong growth.
- Expect system loan growth to pick up to low-double-digits in the next financial year.
- HDFC Bank remains a compounder with earnings rising at above 20 percent.
- Capital raise provides an opportunity for multiple rerating.
Deutsche Bank on Ramco Cement
- Downgraded to ‘Hold’ from ‘Buy’; cut price target to Rs 750 from Rs 790.
- Weak demand and prices in South Indian affects medium-term outlook.
- Rising energy cost to impact margins.
- Cut earnings per share for the financial years through March 2020 by 5-8 percent; Expect 9 percent compounded rate in volume by 9 percent.
- Like longer-term strategy of de-risking business model and expanding in East.
- Prefer Dalmia Bharat and Shree Cement where risk-reward is more attractive.
Jefferies on Petronet LNG
- Maintained ‘Hold’; raised price target to Rs 290 from Rs 280.
- Gorgon contract may cut LNG import price by $1 per mmbtu.
- Renegotiation was widely expected.
- Expect volume, earnings per share to grow at a compounded rate of 4.4 percent and 11 percent respectively by March 2021.
- Volume growth may ease after March.
- Like the business but valuations limit upside.
Nomura on Coal India
- Maintained ‘Neutral’; raised price target to Rs 283 from Rs 260.
- Indirect coal price hike to result in 3 percent annual revenue hike.
- Earnings set to recover, but valuation not compelling.
- Earnings per share estimates for the next two financial years raised by 4 percent and 6 percent respectively to factor in hike.
- Expect dividend per share of Rs 14 and Rs 19 for the current and the next financial year.