Asian equities headed for a sixth week of gains even as investors face the test of rising yields, with benchmark 10-year Treasuries reaching levels last seen in 2016. The dollar edged lower as the possibility of a government shutdown grew.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.2 percent to 10,831 as of 7:10 a.m.
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Here’s a quick look at all that could influence equities on Friday.
- Most U.S. equity gauges ended lower, led by weakness in real estate, energy producers and household products makers.
- The yield on 10-year Treasuries climbed above 2.6 percent for the first time since March, while the dollar failed to hold the previous day’s gain.
- Investors speculated that Apple Inc. may sell some securities to pay the tax bill it will incur from its planned cash repatriation.
- European stocks advanced but struggled to stay in the green as the euro shrugged off ECB attempts to talk down the currency earlier this week.
- Japan’s Topix index rose 0.6 percent in Tokyo.
- Hong Kong’s Hang Seng Index were little changed.
- Australia’s S&P/ASX 200 Index fluctuated and South Korea’s Kospi index added 0.2 percent.
- Futures on the S&P 500 rose 0.1 percent after the underlying gauge slipped 0.2 percent Thursday, when the Dow Jones Industrial Average retreated 0.4 percent.
- Gold was little changed at $1,327.25 an ounce.
- West Texas Intermediate crude fell 0.4 percent to $63.69 a barrel.
- Brent ended lower at $69.31/barrel, down 0.1 percent.
- Sugar ended over two-year low at 13.08 cents per barrel; down 2.5 percent.
- Steel trades higher for fourth day; up 0.7 percent.
- Aluminium snaps three-day losing streak; up 0.7 percent.
- Zinc trades lower for fourth day; down 0.1 percent.
- Copper snaps five-day losing streak; up 0.1 percent.
- Rubber trades lower; down 0.1 percent.
Nifty Earnings To Watch
- HDFC Bank
- Kotak Mahindra Bank
- Reliance Industries
Other Earnings To Watch
- GNA Axles
- HDFC Standard Life Insurance
- ICICI Prudential Life Insurance
- IDFC Bank
- Jubilant Foodworks
- Kansai Nerolac Paints
- NIIT Technologies
- PC Jeweller
- Tata Elxsi
Earnings Reaction To Watch
HCL Technologies Consolidated Q3 (QoQ)
- Maintained revenue guidance of 10.5-12.5 percent for FY18 in constant currency terms.
- Retains FY18 operating margin guidance at 19.5-20.5 percent.
- Keeps FY18 dollar sales growth guidance at 12.1-14.1 percent.
- Net profit down 6 percent at Rs 2,075 crore.
- Revenue up 3 percent at Rs 12,809 crore.
- Sales in dollar terms up 3.1 percent at $1,988 million
- EBIT up 2.4 percent at Rs 2,510 crore.
- Margin at 19.6 percent versus 19.7 percent.
- Constant currency financial services operations grew 2.8 percent.
Bharti Airtel Q3 (QoQ)
- Revenue down 7 percent at Rs 20,319 crore.
- Ebitda down 6 percent at Rs 7,469 crore.
- Margin at 36.76 percent from 36.38 percent.
- Net Profit down 11 percent at Rs 306 crore.
- ARPU down 15 percent to Rs 123.
Cyient Q3 (QoQ)
- Revenue up 2 percent at Rs 983 crore.
- Net profit down 21 percent at Rs 87.8 crore.
- EBIT down 1 percent at Rs 112 crore.
- Margin at 11.4 percent from 11.7 percent.
Zensar Technologies Q3 (QoQ)
- Revenue up 4 percent at Rs 794 crore.
- Net profit down 6 percent at Rs 59 crore.
- EBIT up 26.8 percent at Rs 90 crore.
- Margin at 11.3 percent from 9.3 percent.
Deepak Nitrite Q3 (YoY)
- Revenue up 22 percent at Rs 371 crore.
- Net profit up 170 percent at Rs 20 crore.
- Ebitda up 68 percent at Rs 52 crore.
- Margin at 14.0 percent from 10.2 percent.
Jubilant Industries Q3 (YoY)
- Revenue up 4.9 percent at Rs 119 crore.
- Net loss of Rs 2.2 crore from a net loss of Rs 5.6 crore.
- Ebitda up 6 percent at Rs 5.3 crore.
- Margin at 4.5 percent from 4.4 percent.
Kewal Kiran Clothing Q3 (YoY)
- Revenue flat at Rs 94.4 crore.
- Net profit up 25 percent at Rs 10.4 crore.
- Ebitda up 48 percent at Rs 15.8 crore.
- Margin at 16.7 percent from 11.4 percent.
Stocks To Watch
- RBI hikes foreign investment limit in Healthcare Global to 100 percent from 24 percent earlier.
- Alembic board to consider buyback of shares on Jan. 23.
- Biocon enters into a global partnership with Sandoz to develop, manufacture and commercialise multiple biosimilars in immunology and oncology.
- Savita Oil Technologies to consider share buyback on Jan. 23.
- Torrent Pharma acquires U.S.-based generic pharmaceuticals Bio-Pharma Inc.
- Tech Mahindra to acquire 17.5 percent shares of Altiostar on a fully diluted basis.
Websol Energy System
- Garnet International bought 1.40 lakh shares or 0.5 percent equity at Rs 130.62 each.
- SBI MF bought 1.53 crore shares or 3.7 percent equity at Rs 129.97 each.
- Promoters sold 1.4 crore shares or 3.3 percent equity at an average of Rs 130.05 each.
Arman Financial Services
- Param Capital bought 3.25 lakh shares or 5.7 percent equity at Rs 255.5 each.
- Reliance MF sold 3.94 lakh shares or 6.9 percent equity at Rs 255.5 each.
- General Insurance Corp of India sold 1.12 lakh shares or 0.6 percent equity at Rs 18.3 each.
- United India Insurance sold 1 lakh shares or 0.5 percent equity at Rs 18.25 each.
- Circuit filter revised to 10 percent: Excel Crop Care and Thirani Projects.
- Circuit filter revised to 5 percent: Gallant Ispat and Confidence Petroleum.
Who’s Meeting Whom?
- Vipul to meet investors on Jan. 19.
- Eris Life to meet Dolat Capital on Jan. 19.
- Minda Industries to meet investors on Jan. 19.
- Dishman to meet investors on Jan. 19.
- Jindal Hotels promoter bought over 31,000 shares from Jan. 1-17.
- Fiberweb India promoter sold 45,000 shares from Jan. 15-16.
- Manugraph India promoter sold 10,000 shares on Jan. 16.
- Newgen Software Technologies IPO closes. The issue was subscribed 8.1 times.
- Amber Enterprises India IPO continues on day 3. The issue is subscribed 3.6 times.
- Rupee closed at 63.86/$ on Thursday from 63.89/$ on Wednesday.
Top Gainers And Losers
- Nifty January futures trading at 10,810.8, discount of 6.2 points from a premium of 3.3 points.
- January Series: Nifty open interest unchanged; Bank Nifty open interest down 1 percent.
- India VIX ended at 13.9, up 0.7 percent.
- Max open interest for January series at 11,000 Call (open interest at 62.2 lakh, up 24 percent).
- Max open interest for January series at 10,500 Put (open interest at 70 lakh, down 12 percent).
- In ban: Balrampur Chini, Dish TV, DLF, Fortis, GMR Infra, HCC, HDIL, IFCI, India Cement, Jain Irrigation, Kaveri Seed.
- New in ban: DLF.
- Out of ban: Capital First, Jindal Steel, JP Associates, Reliance Power.
Only intraday positions can be taken in stocks which are in F&O ban. There is a penalty in case of a rollover of these intraday positions.
- Nifty PCR at 1.64 from 1.75.
- Nifty Bank PCR at 1.10 from 1.59.
Stocks Seeing High Open Interest Change
Equirus on Ajanta Pharma
- Initiated ‘Add’ with price target of Rs 1,648.
- Company’s relentless growth trajectory likely to pause in the financial years through March 2019.
- Growth recovery would only be back-ended.
- Domestic business – on a strong footing.
- Africa business - IPCA's re-entry should hurt.
- Asia business - Middle East Asia and Central Asia to remain a drag.
- US business - Bleak visibility over future launches.
- Expect revenue to grow at a compounded rate of 10 percent over the financial years through March 2020.
- Operating margins to contract by 250 basis points over the financial years through March 2020 on higher costs/overheads.
- With a moderate growth profile, we expect return on equity and return on capital employed to decline by 10 percentage points.
IDFC on Hindustan Zinc
- Maintained ‘Underperform’; raised price target to Rs 278 from Rs 267.
- Results could have been better with increase in zinc and lead prices .
- Higher cost of production offset pricing gain.
- Volume guidance maintained for the current financial year; positive commentary on zinc market.
- Cost of production to be 10 percent lower on a quarterly basis in the current quarter.
- Stock price factors in average zinc price of US$3,300/t in the financial year-ending March 2020.
- Comfort is dividend yield of 5 percent.
Citi on Yes Bank
- Maintained ‘Buy’ with price target of Rs 400.
- Strong growth, but margin and asset quality miss.
- CASA and fee momentum continue with gains in retail lending franchise.
- Slippages and credit costs remained relatively elevated.
Morgan Stanley on Yes Bank
- Maintained ‘Overweight’ with price target of Rs 450.
- Earnings in the previous quarter missed, driven by lower-than-expected net interest income and higher provisions, partially offset by higher non-interest income.
Emkay on UltraTech Cement
- Maintained ‘Accumulate’; raised price target to Rs 4,686 from Rs 4,585.
- Impressive volume growth, pricing pressure drags margins.
- Volume beats estimates, realisation lags.
- Management upbeat on volume growth on government initiatives.
- Company well positioned to generate superior profits.
- Positives: demand recovery, capacity expansion plans and under-utilized capacities.
Credit Suisse on UltraTech Cement
- Maintained ‘Underperform’; raised price target to Rs 3,500 from Rs 2,900.
- Weak results due to lower average selling price and higher costs.
- Weak ASP trend continues; No meaningful pick-up in January.
- JPA assets: Brand transition done; Focus on utilisation.
- Expect high supply pressure in the next financial year.
- Weak demand impacting pass through of cost increase.
- Stock already factoring in upside from demand pick-up over the next three years.
HSBC on Hospitals
- Regulatory overhang continues India.
- Private players focus on volume growth.
- Government continues scrutiny on healthcare services costs.
- Maintain Buy on Apollo and Fortis on long-term growth outlook.
HSBC on Fortis
- Maintained ‘Buy’; raised price target to Rs 225 from Rs 172.
- Outlook remains positive for hospital business with scope of margin improvement.
- Wait on update on SRL demerger progress.
- Rationalisation & higher focus on retail customers continue to grow margins.
- Fortis on track to focus on clinical excellence programs and hence improving case mix.
HSBC on Apollo
- Maintained ‘Buy’ with price target of Rs 1,300.
- Near-term challenges continue
- Expect operating leverage-driven gradual recovery to begin in the next financial year.
- Breakeven at Navi Mumbai expected by first half of the next fiscal year.
- Tariff hike and rationalisation at Chennai should offset low volume growth.
- Consolidation to benefit hospital business post capex expansion cycle.
Citi on Adani Ports
- Maintained ‘Buy’ with price target of Rs 575.
- Previous quarter was well-rounded and strong.
- Volume growth was strong and broad based across commodities and ports.
- Strong volumes led to strong headline numbers.
- Management guided for increase in free cash flow and increase in dividend payout.
- Prominent and strong position in Indian port services space.
- Adani Ports one of the top picks in India infrastructure/logistics.
Goldman Sachs on Infra
- L&T: Maintained ‘Buy’ and added to conviction List with a price target of Rs 1,600, implying a potential upside of 21 percent from last regular trade.
- Container Corp: Upgraded to ‘Buy’ with price target of Rs 1,660, implying a potential upside of 17 percent form last regular trade. Improving execution and cash flow to drive re-rating.
- Adani Ports: Maintained ‘Buy’ with price target of Rs 488, implying a potential upside of 15 percent form last regular trade. Successfully moving to cash generating mode from CAPEX mode.
Macquarie on Hindustan Zinc
- Maintained ‘Outperform’ with price target of Rs 329.
- Strong commodity prices drive previous quarter earnings.
- No risk to current fiscal earnings despite hedge losses and higher costs.
- Impressive growth pipeline with expansion on track.
- Hindustan Zinc remains in a sweet spot with a strong volume growth pipeline.