Elevators travel next to electronic boards displaying stock figures at the National Stock Exchange of India Ltd. (NSE) building in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

All You Need To Know Going Into Trade On Jan. 23

Asian stocks extended the strong start to the year, heading for fresh all-time highs, as investors turn with optimism toward the earnings season after the U.S. government shutdown moved toward an end.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.3 percent to 10,999 as of 7 a.m.

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DayBreak

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

Global Cues

  • U.S. equity gauges closed at records as the government shutdown appeared to be on the brink of ending and investors turned their attention toward earnings.
  • Investors are awaiting about 80 earnings reports this week from companies in the benchmark index.
  • The dollar traded near lows for the year and 10-year Treasury yields held close to 2.66 percent.

Europe Check

  • European stocks rose for a third day as gains in telecom shares offset losses in travel and leisure companies.
All You Need To Know Going Into Trade On Jan. 23

Asian Cues

  • Japan’s Topix index rose 0.6 percent. Australia’s S&P/ASX 200 Index gained 0.7 percent and South Korea’s Kospi index advanced 0.5 percent.
  • Futures on Hong Kong’s Hang Seng Index added 0.4 percent.
  • Futures on the S&P 500 Index were little changed.
  • The MSCI All-Country World Index climbed 0.6 percent to the highest on record Monday. It’s up 5.8 percent in 2018.
  • The MSCI Emerging Market Index advanced 0.5 percent, its seventh consecutive advance.

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

  • Earnings season is in full swing: Fanuc, Novartis, General Electric, Intel, LVMH Moet Hennessy Louis Vuitton, Starbucks and Hyundai Motor come later in the week.
  • Barring any last minute changes in Washington, President Donald Trump will join world leaders and senior executives in Davos, Switzerland, for the annual World Economic Forum.
  • Central banks: Bank of Japan monetary policy decision and briefing on Tuesday; European Central Bank rate decision on Jan. 25.
  • U.K. Prime Minister Theresa May’s Brexit bill is set to be taken up in the House of Lords.
  • Prime Minister Narendra Modi to address at the Davos World Economic Forum, International Business Council and interact with CEOs.

Commodity Cues

  • West Texas Intermediate crude rose 0.4 percent to $63.82 a barrel.
  • Brent ended higher at $69.03/barrel, up 0.6 percent.
  • Gold was little changed at $1,333.51 an ounce.
  • Sugar ended lower at 13.17 cents per pound; down 0.6 percent.

Shanghai Exchange

  • Steel snaps five-day losing streak; down 0.6 percent.
  • Aluminium trades higher; up 0.5 percent.
  • Zinc trades lower; down 0.1 percent.
  • Copper trades lower for second day; down 0.04 percent.
  • Rubber snaps two-day losing streak; up 0.5 percent.

Indian ADRs

All You Need To Know Going Into Trade On Jan. 23

Nifty Earnings To Watch

  • Indiabulls Housing Finance

Other Earnings To Watch

  • Alembic
  • Can Fin Homes
  • Crompton Greaves Consumer Electricals
  • Edelweiss Financial Services
  • Force Motors
  • Indiabulls Real Estate
  • L&T Technology Services
  • NIIT
  • PNB Housing Finance
  • RBL Bank
  • Symphony
  • Syngene International
  • United Spirits
  • Wabco India

Earnings Reaction To Watch

Asian Paints Q3 (YoY)

  • Revenue up 10.5 percent at Rs 4,260.5 crore.
  • Net profit up 19 percent at Rs 555 crore.
  • EBITDA up 18 percent at Rs 891.5 crore.
  • Margin at 20.9 percent.

Rallis India Q3 (YoY)

  • Revenue up 18.5 percent at Rs 390 crore.
  • Net profit down 1 percent at Rs 25.1 crore.
  • EBITDA down 14 percent at Rs 37 crore.
  • Margins at 9.5 percent versus 13.1 percent.

Sasken Tech Q3 (QoQ)

  • Revenue up 5.6 percent at Rs 132 crore.
  • Net profit up 8.5 percent at Rs 20.4 crore.
  • EBITD down 11.7 percent at Rs 15 crore.
  • Margin at 11.4 percent versus 13.6 percent.

Tinplate Q3 (YoY)

  • Revenue up 146 percent at Rs 547 crore.
  • Net profit up 189 percent at Rs 13 crore.
  • EBITDA up 89.5 percent at Rs 36 crore.
  • Margins at 6.6 percent versus 8.6 percent.

Just Dial Q3 (QoQ)

  • Revenue up 1 percent at Rs 197 crore.
  • Net profit down 24 percent at Rs 28.6 crore.
  • EBIT up 25 percent at Rs 38 crore.
  • Margin at 19.3 percent versus 15.7 percent.

MPS Q3 (YoY)

  • Revenue down 15 percent at Rs 68 crore.
  • Net profit down 2 percent at Rs 17.6 crore.
  • EBITDA down 5 percent at Rs 25.1 crore.
  • Margin at 36.4 percent versus 32.8 percent.

Stocks To Watch

  • Indian Oil Corporation board to consider bonus issue on Jan. 30.
  • Kalpataru Power gets multiple orders worth Rs 871 crore.
  • Torrent Pharma to consider fund raising via bonds, share placement on Jan. 25.
  • Om Metals reached an agreement with a Jaipur-based developer to withdraw claim on 56,000 square metre land.
  • Bajaj Corp. introduced new Coco Jasmine hair oil.
  • Swaraj Engines buyback to open on Jan. 31.
  • HSIL commissions pipe manufacturing plant in Telangana.

Bulk Deals

  • Lux Industries: Kotak Mahindra AMC bought 1.68 lakh shares or 0.7 percent equity at Rs 1525.2 each.
  • Indoco Remedies: Reliance Growth Fund bought 12.11 lakh shares or 1.3 percent equity at Rs 275 each.
  • IRB Invit: Prusik Umbrella UCITS Fund PLC - Prusik Asian Equity Income Fund bought 28.25 lakh units at Rs 87.17 each.
  • Videocon: Yes Bank sold 17.39 lakh shares or 0.6 percent equity at Rs 21.27 each.
  • Religare Enterprises: IDBI Trusteeship services sold 22.55 lakh shares or 1.3 percent equity at Rs 50.26 each.

8K Miles

  • DSP Blackrock MF bought 4.26 lakh shares or 1.4 percent equity at Rs 748 each.
  • Promoter R S Ramani sold 6.82 lakh shares or 2.2 percent equity at an average of Rs 749.32 each.

MCX

  • SBI MF bought 8.19 lakh shares or 1.6 percent equity at Rs 840.5 each.
  • Baron International Growth Fund sold 11.3 lakh shares or 2.2 percent equity at Rs 840.5 each.

Corporate Action

  • Excel Realty and Infra ex-date for 2:1 bonus.

Who’s Meeting Whom?

  • PC Jewellers to meet investors in road show in Taiwan, Hong Kong and Singapore from Jan. 22-26.
  • MEP Infra to meet Kotak AMC, Principal PNB, SBI MF on Jan. 23.
  • Weizmann Forex to meet funds in Singapore and Hong Kong on Jan. 23-25.
  • Zee Learn to meet Alder Capital on Jan. 23.
  • TNPL to meet Pabrai Investment on Jan. 24.

Insider Trades

  • PTL Enterprises promoter bought 3.75 lakh shares of Apollo Tyres on Jan. 18-19.
  • Lakshmi Overseas promoter sold 1.3 lakh shares on Jan. 18.
  • Adani Transmission promoter revokes pledge of 9 lakh shares on Jan. 19.
  • KCP promoter sold 26k shares on Jan. 17-18.
  • Max Financial Services promoter revokes pledge of 27 lakh shares on Jan. 17.

Rupee

  • Rupee closed at 63.87/$ on Monday from 63.85/$ on Friday.

Top Gainers And Losers

All You Need To Know Going Into Trade On Jan. 23

Index Trends

All You Need To Know Going Into Trade On Jan. 23

F&O Cues

  • Nifty January futures trading at 10,968, premium of 1.8 points versus discount of 6.2 points.
  • January Series: Nifty open interest down 9 percent; Bank Nifty open interest down 3 percent.
  • Across series: Nifty open interest up 2 percent; Bank Nifty open interest up 5 percent.
  • India VIX ended at 15.3, up 10 percent.
  • Rollover: Nifty at 20 percent, Bank Nifty at 23.5 percent.
  • Max open interest for January series at 11,000 Call (open interest at 51.1 lakh, down 5 percent).
  • Max open interest for January series at 10,500 Put (open interest at 70.6 lakh, down 5 percent).

F&O Ban

  • In ban: Balrampur Chini, Dewan Housing, DLF, Fortis, HCC, HDIL, IFCI, JP Associates, Just Dial, Kaveri Seed.
  • New in ban: Dewan Housing, JP Associates, Just Dial.
  • Out of ban: Dish TV, GMR Infra, Jain Irrigation.


Only intraday positions can be taken in stocks which are in F&O ban. There is a penatly in case of rollover of these intraday positions.

Put-Call Ratio

  • Nifty PCR at 1.79 from 1.30.
  • Nifty Bank PCR at 1.30 from 1.10.

Stocks Seeing High Open Interest Change

(BloombergQuint)
(BloombergQuint)

Fund Flows

All You Need To Know Going Into Trade On Jan. 23

Brokerage Radar

Elara Capital on L&T Technology Services

  • Initiated ‘Accumulate’ with price target of Rs 1,170.
  • Broad portfolio, deep expertise driving growth.
  • Expect new client relationships to scale up gradually.
  • Lower client concentration than domestic peers.
  • L&T helping in domain expertise, client access.
  • Expect revenue, operating income and net profit compounding at 17.4 percent, 25.2 percent and 22.5 percent respectively over the financial years through March 2020.
  • Faster growth to lead to earnings upgrade.
  • Bull case price target of Rs 1,560.

Credit Suisse on Havells India

  • Maintained Outperform; raised price target to Rs 635 from Rs 600.
  • December quarter was a strong broad-based quarter.
  • Consumer durables and lighting drove growth.
  • Switchgears saw modest pick-up; B2B initiatives seeing traction.
  • Margins very strong; Cables have set new normal of profitability.
  • Lloyd growth aided by some pre-buying before new energy norms.

Edelweiss on Havells India

  • Maintained ‘Buy’ with price target of Rs 640.
  • Favorable base leads to in-line quarter; Growth profile intact.
  • Impressive growth in lighting/consumer durable on low base.
  • Havells well placed to benefit with demonetization and GST mostly behind.
  • Positives: shift to organized, rising premiumisation and ramp up in Lloyds’ profitability.

IDFC Securities on Asian Paints

  • Maintained ‘Outperform’; cut price target to Rs 1,262.
  • Volume miss; lower costs drive earnings growth.
  • Volume growth of 6 percent for the quarter is disappointing.
  • Cost management initiatives and better mix resulted in strong margin improvement.
  • Expect uptick in volumes driven by favourable base and improving demand.
  • Expect price hikes to mitigate input cost pressure.
  • Market share loss over last three quarters is a concern.

Morgan Stanley on Dr. Reddy’s

  • Maintained ‘Overweight’ with price target of Rs 3,133.
  • Raised prices by 5 percent for Sernivo spray and Zembrace in January 2018.
  • Small brands with gross sales of $20/25 million.
  • Price hike to have small impact but shows confidence in the ramp-up ahead.
  • March 2018 important month with three upcoming Target Action Dates.

Credit Suisse on Asian Paints

  • Maintained ‘Underperform’; raised price target to Rs 1,100 from Rs 1,060.
  • Volume growth significantly below expectations.
  • Competitors continue to grow volumes faster.
  • Management cautiously optimistic as December growth had been good.
  • EBITDA growth driven by tightening fixed costs, lowering marketing spends and GST savings.
  • Raw material costs firming up; Needs to take a price hike to stem gross margin decline.

Brokerages On Axis Bank

JPMorgan

  • Maintained ‘Overweight’, raised price target to Rs 700 from Rs 650.
  • Guidance of 225-260 basis points with normalised credit costs expected.
  • See the next 2-3 quarters as challenging given the uncertainty over timing and quantum of back-book provisioning.
  • At about 2 times price-to-book and a FY20 return on equity estimate of 19.5 percent, Axis Bank is our top value pick.

Morgan Stanley

  • Maintained ‘Overweight’; price target Rs 770
  • Impaired loans at Axis showed good trends after a weak December quarter.
  • Expect asset quality and core pre-provision operating profit trends to be volatile over the next four quarters.
  • Expect continued improvement in impaired loans over the next four quarters.
  • This should drive strong stock performance over the next 12 months.

Credit Suisse

  • Maintained ‘Neutral’, raised price target to Rs 595 from Rs 525.
  • Asset quality stabilises, operating profitability yet to improve.
  • Expect credit costs to normalise from 2.7 percent in current fiscal to 1.2 percent in Fiscal 2020.

CLSA

  • Maintained ‘Buy’, raised price target to Rs 730 from Rs 650.
  • Key positive in the result was improvement in asset quality.
  • Expect earnings to normalise from the next fiscal.