Pedestrians walk past the Bombay Stock Exchange (BSE) building in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

All You Need To Know Going Into Trade On Dec. 21

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.

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Day Break

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

Global Cues

  • 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.

Europe Check

  • 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.
All You Need To Know Going Into Trade On Dec. 21

Asian Cues

  • 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.

Commodity Cues

  • 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.

Shanghai Exchange

  • 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.

Indian ADRs

All You Need To Know Going Into Trade On Dec. 21

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.

Bulk Deals

  • 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.

Ashiana Housing

  • 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

Zee Learn

  • 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.

Transpek

  • 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.

Siti Network

  • 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.

Trading Tweaks

  • 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.

IPO

  • 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.

Insider Trades

  • Prozone Intu Properties promoter sold 60,000 shares on Dec. 18
  • Digjam promoter sold 2 lakh shares between Dec. 14-19

Rupee

  • Rupee closed at 64.11/$ on Wednesday from 64.04/$ on Tuesday.

Top Gainers And Losers

All You Need To Know Going Into Trade On Dec. 21

Index Trends

All You Need To Know Going Into Trade On Dec. 21

F&O Cues

  • 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.)

F&O Ban

  • 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.

Put-Call Ratio

  • Nifty PCR at 1.49 versus 1.44.
  • Nifty Bank PCR at 1.07 versus 1.22.

Stocks Seeing High Open Interest Change

All You Need To Know Going Into Trade On Dec. 21

Fund Flows

All You Need To Know Going Into Trade On Dec. 21

Brokerage Radar

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.