All You Need To Know Going Into Trade On Jan. 5

Stocks in Asia are on the cusp of their best week in almost six months as investors around the world pile into equities at the start of 2018 amid robust economic data from the U.S. to Europe to China.

The Singapore traded SGX Nifty, an early indicator of Nifty 50 Index’s performance in India, rose 0.23 percent to 10,556 as of 7:15 a.m.

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DayBreak

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

Global Cues

• Stocks rallied around the world on signs the global economic expansion that pushed benchmarks to records in 2017 remains intact.
• The dollar is headed for a fourth straight week of losses as the global economic expansion spurs investors to look at markets with lower valuations and better risk-return prospects.
• Treasuries initially slid early in the U.S. session after an ADP employment report showed that private payrolls rose more than forecast in December, before paring losses into the close.
• Eyes now turn to Friday’s U.S. employment report for evidence of continued momentum in the world’s largest economy. The report is expected to show that nonfarm payrolls rose 190,000 in December, according to a Bloomberg survey.

Europe Check

• Builders and carmakers led the advance in Europe, with most of the sectors in the Stoxx Europe 600 Index strengthening.
• Core European bonds pared Wednesday’s gains and the euro advanced toward a three-year high as data showed economic activity in the region accelerated to the fastest pace in almost seven years.

Asian Cues

• Japan’s Topix Index rose 0.6 percent, and the Nikkei 225 Stock Average was up 0.5 percent.
• Futures on the S&P 500 Index were little changed.
• Futures on Hong Kong’s Hang Seng Index rallied 0.4 percent.
• Australia’s S&P/ASX 200 Index gained 0.6 percent.
• The MSCI Asia Pacific Index is poised to build on Thursday’s record high, while the MSCI Emerging Markets Index is at a level unseen since 2011.

Here are highlights of key events investors will be monitoring the rest of the week:

• Asia has a smattering of lower-tier data, including inflation for Taiwan and foreign reserves data for Thailand, which has been contending with a rising currency.
• Europe brings German retail sales, EU CPI and French consumer confidence.
• Canada also reports labor market data Friday, while the U.S. reports on trade and factory orders. Philadelphia Fed President Patrick Harker and Cleveland Fed President Loretta Mester speak on panels.
• India releases an estimate for 2018 economic growth Friday.

Commodity Cues

• Commodities steadied after a record run of gains, with oil trading close to its highest in three years.
• Brent crude ended higher at $68.07 per barrel, up 0.3 percent.
• West Texas Intermediate crude climbed 0.1 percent to $61.95 a barrel.
• Gold dipped 0.1 percent to $1,321.25 an ounce.
• Sugar ends lower for second day at 15.25 cents per pound; down 0.4 percent.

Shanghai Exchange

• Steel trades lower for second day; down 0.2 percent.
• Aluminium snaps two-day losing streak; up 0.4 percent.
• Zinc trades higher; up 0.6 percent.
• Copper trades lower for fourth day; down 0.02 percent.
• Rubber trades lower for third day; down 0.4 percent.

Indian ADRs

Earnings To Watch

• Simplex Projects
• Uttam Galva Steels
• Videocon Industries

Earnings Reaction To Watch

G M Breweries Q3 (YoY)

• Revenues up 20 percent at Rs 118 crore.
• Net profit at Rs 22 crore.
• EBITDA at Rs 34 crore.
• Margin at 28.8 percent versus 15.3 percent.

Stocks To Watch

• Bharat Forge and RK Forging: U.S. North America Class 8 truck sales for December at 37,200 units, up 77 percent year-on-year.
• Bharti Airtel partners with Samsung to offer Galaxy J-series smartphones at affordable prices.
• Tata Motors: Jaguar Land Rover India 2017 volume growth at 49 percent.
• Varun Beverages enters into a strategic partnership with PepsiCo India for Tropicana.
• HCL Tech terminates pact with GAIC for India joint venture.
• JSW Energy incorporates JSW Solar to pursue business opportunities in renewable energy space.
• Take Solutions incorporates subsidiary Navitas Lifesciences in Columbia.
• Indian Overseas Bank: To utilise Rs 7,650.1 crore in share premium account to write off Rs 6,978.94 crore losses.
• Government seeks bids from advisors for sale of Dredging Corp, HLL.
• GTL Infra on track to add 5,000 tenancies in current fiscal; expect to add 5,000 tenancies in the next financial year.
• Samvardhana Motherson International Ltd. acquires MS Global India.
• Jaypee Infratech: Aims to complete 24,000 flats by 2020 for Rs 8,000 crore.

Bulk Deals

• Jain Irrigation: International Finance Corp sold 75 lakh shares or 1.5 percent equity at Rs 125.52 each.
• Gayatri Projects: Afrin Dia sold 34.88 lakh shares or 2 percent equity at Rs 220.4 each.
• Gitanjali Gems: Macquarie Finance (India) pvt ltd sold 25 lakh shares or 2.1 percent equity at Rs 73.5 each.
• Satin Credit Care: MV Mauritius sold 4.30 lakh shares or 1 percent equity at Rs 427.01 each.
• Nandan Denims: LTS Investment Fund bought 2.45 lakh shares or 0.5 percent equity at Rs 163.5 each.
• Aro Granite: Amrit India Value Fund sold 1.40 lakh shares or 0.9 percent equity at Rs 97.2 each.
• Veer Health: Promoter Divyabala Shah sold 4.14 lakh shares or 6 percent equity at Rs 22.35 each.

Apollo Pipes

• India Accorn Fund bought 1.64 lakh shares or 3.3 percent equity at Rs 652.1 each.
• Param Capital bought 1 lakh shares or 2 percent equity at Rs 656 each.
• Kotak Mahindra MF bought 2.75 lakh shares or 5.5 percent equity at Rs 655.61 each.
• Vinay Gupta sold 10.19 lakh shares or 20.4 percent equity at Rs 657.13 each.
• Neera Gupta sold 3.22 lakh shares or 6.5 percent equity at Rs 653.49 each.
• Meenakshi Gupta sold 3.86 lakh shares or 7.7 percent equity at Rs 656.95 each.

Subex

• UNO Metals bought 47.25 lakh shares or 0.8 percent equity at Rs 10.87 each.
• QVT Mauritius West Fund – FCCB A/c sold 70.72 lakh shares or 1.3 percent equity at Rs 10.9 each.

Trading Tweaks

• Circuit filter revised to 10 percent: Ludlow Jute and Orient Power.

Who’s Meeting Whom?

• Advanced Enzymes to meet Astute Investment Management on Jan. 5.
• Dixon Tech to meet ICICI Securities on Dec 5, Steadview Capital on Jan. 9 and Stewart & Mackertich Wealth Management on Jan. 11.
• Mahanagar Gas to meet Antique Stock broking on Jan. 8.
• PG Electroplast to meet Catalytic Solutions and Management on Jan. 8.
• PSP Projects to meet Ask Investment on Jan. 5, White Oak Capital and Aditya Birla Money on Jan. 10-11.

Insider Trades

• Vardhman Textiles promoter sold 9,000 shares on Jan. 3.
• WPIL Promoter bought over 46,000 shares on Jan. 3.
• Jayshree Chemicals promoter sold 50,000 shares on Jan. 3.
• Maithan Alloys promoter sold over 20,000 shares on Jan. 1.
• Globus Spirits promoter sold over 1.25 lakh shares on Jan. 2-3.

Rupee

• Rupee closed at 63.41/$ on Thursday from 63.54/$ on Wednesday.

Top Gainers And Losers

Index Trends

F&O Cues

• Nifty January futures trading at 10,526, premium of 22 points versus 26 points.
• January Series: Nifty open interest up 2 percent; Bank Nifty open interest down 1 percent.
• India VIX ended at 13.4, down 1.5 percent.
• Max open interest for January series at 11,000 Call (open interest at 44 lakh, up 1 percent).
• Max open interest for January series at 10,300 Put (open interest at 54 lakh, up 15 percent).

F&O Ban

• In ban: Fortis Healthcare, GMR Infra, HDIL, IFCI, Jindal Steel, Jain Irrigation, JP associates and Reliance Power.
• New in ban: Jindal Steel, Jain Irrigation.
• Out of ban: Reliance Communications.

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 1.54 versus 1.48.
• Nifty Bank PCR at 0.95 versus 0.81.

Stocks Seeing High Open Interest Change

Fund Flows

Brokerage Radar

Brokerages on Idea Cellular Fund Infusion

• IDFC Securities: Capital infusion was much needed in Idea, considering the company’s leveraged balance sheet and the need to catch up with incumbents on 4G networks (capex).
• Edelweiss: Fund raising has been necessitated by the Vodafone merger pact limiting peak leverage. Expect Idea to use the proceeds primarily to prune leverage. Expect Idea’s debt to increase in the second half of the current financial year owing to lower operating income due to interconnect usage charges reduction and sustained competitive intensity.
• Goldman Sachs: Capital infusion to increase market confidence in the commitment of promoter entities. Fund raising would help lower debt, but leverage ratios likely to stay elevated given ongoing rapid decline in operating income.
• Deutsche Bank: Promoter group underlines commitment by subscribing to 48 percent of the issue. Fund raising to provide further headroom for the mergeco to defend its.

CLSA on Idea Cellular

• Upgraded to ‘Buy’ from ‘Sell’; raised price target to Rs 130 from Rs 77.
• Move stock valuations to merged financials.
• Expect revival in long-term growth.
• Merged company offers compounded growth rate of 38 percent in operating income over the next three financial years.
• Merger is crucial to address inadequacy in data spectrum.
• Idea’s cut in gearing and early closure of merger trigger.
• Expect integration costs and full merger synergies of Rs 14,000 crore annually by March 2023.

Credit Suisse on India Outlook 2018

• Maintain cautiously optimistic outlook on Indian equities.
• Enthused by reform momentum.
• Fiscal crunch, several state elections, earnings downgrades and high valuations make nervous.
• Do not expect sharp and prolonged correction in Indian equities.
• Themes to play:-
• Rural demand revival and financial inclusion.
• Affordable housing beneficiaries.
• Infrastructure focus to continue.
• Energy sector continues to attract attention.
• NPA resolution to accelerate.
• rev-share against aggressive competition.

IIFL on Motherson Sumi

• Maintained ‘Buy’; raised price target to Rs 450 from Rs 300.
• Motherson is a global giant built on sound operating/financial principles.
• History of value creation through acquisitions offers sizeable upside risk.
• Pickup in autos to drive acceleration in Motherson’s growth.
• Increase in content per vehicle a key growth driver.
• Good mix of business with steady growth and turnaround potential to drive earnings.
• Expect revenue, operating income and earnings per share to grow at a compounded rate of 16 percent, 16 percent and 28 percent respectively over the financial years through March 2020.

IDFC Securities on PI Industries

• Maintained ‘Outperform’; raised price target to Rs 1,085.
• Expect PI to bounce back to growth from the second half of the current financial year, led by new product launches and exports business.
• CSM business – Strong recovery expected.
• Robust orderbook provides revenue visibility for next three years.
• Unique business model enables growth despite headwinds.
• Expect revenue and net profit to grow at a compounded rate of 12 percent and 6 percent over the financial years through March 2020.
• Foray into non-agrochemical CSM to result in substantially re-rating in the medium term.

Jefferies on Oil&Gas

• Expects oil prices to hold the late 2017 gains, therefore, forecasting $63 Brent.
• Rising oil a headwind for India’s macro balances but is manageable.
• Refining margins may moderate down as demand-supply looking balanced.
• Expect model steady rise in marketing margins, but uncertain in a heavily political 2018-19.
• ONGC and Indian Oil are preferred; Retains Underperform on Reliance, Bharat Petroleum and Hindustan Petroleum.