A stockbroker studies share prices on his computer screens at Shore Capital Markets in London, U.K. (Photographer: Chris Ratcliffe/Bloomberg News) 

All You Need To Know Going Into Trade On Feb. 16

Japanese stocks extended a rally in global equities and the yen retreated from a 15-month high, with trading muted due to holiday closures across Asia.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.3 percent to 10,586.50 as of 6:50 a.m.

Short on time? Well, then listen to this podcast for a quick summary of the article!

DayBreak

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

Global Cues

  • U.S. stocks capped their best five-day run since 2011, extending a global rally as equities rebounded from the worst of this month’s correction.
  • Stock investors brushed off a report on U.S. wholesale prices that underscored signs of stronger inflation even as a growing number of economists now expectthe Federal Reserve to step up the pace of its interest-rate increases this year.
  • A report yesterday showing faster consumer-price increases gave rise to debate on the breakdown in the greenback’s correlation to interest rates, as currency investors focused instead on the U.S.’s twin deficits.
  • The yield on 10-year Treasuries hovered near 2.9 percent.

Europe Check

  • European stocks rose for a second day, closing at a one-week high as U.S. equities continued to rebound after the biggest slump since 2016.

Asian Cues

  • Japan’s Topix index rose 0.6 percent.
  • Australia’s S&P/ASX 200 Index advanced 0.3 percent.
  • Futures on the S&P 500 rose 0.1 percent after the underlying gauge climbed 1.2 percent on Thursday.
  • The Stoxx Europe 600 Index climbed 0.5 percent Thursday, when the MSCI All-Country World Index advanced 1.2 percent.

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

  • Australia’s central bank governor is giving testimony in parliament. Tune in to our blog on the hearing here.
  • A handful of European Central Bank officials are due to speak Friday.
  • Lunar New Year celebrations for the Year of the Dog have begun, affecting China, Hong Kong, Taiwan, Singapore, Malaysia and Indonesia. Chinese mainland markets are closed Feb. 15-21.

Commodity Cues

  • West Texas Intermediate crude rose 0.3 percent to $61.50 a barrel.
  • Gold was flat at $1,353.76 an ounce.
  • Brent snaps two-day winning streak; ends marginally lower at 64.33 per barrel; down 0.1 percent.
  • Sugar snaps two-day losing streak; ends 1.5 percent higher at 13.51 cents per pound.

Indian ADRs

Earnings To Watch

  • Varun Beverages

Stocks To Watch

  • UCAS appointed Infosys as its core technology partner up to 2021.
  • HDFC allots 2.49 crore shares to investors at Rs 1,726.05/share on a preferential basis.
  • SBI and Union Bank are said to be exposed to $1.8 billion PNB fraud case: Bloomberg.
  • Allahabad Bank’s exposure at about Rs 4,000 crore in PNB fraud case: Bloomberg.
  • Union Bank’s exposure at about Rs 1,000-2,000 crore in PNB fraud case: Bloomberg.
  • Axis Bank’s exposure at about Rs 2,000-3,000 crore in the PNB fraud case: Bloomberg.
  • IDBI Bank sells entire 30 percent stake in NSDL e-Governance infrastructure.
  • Indoco Remedies gets European GMP certification for manufacturing facility in Goa.
  • Prakash Industries to raise Rs 208 crore from promoters by issuing 1 crore convertible warrants.
  • India Grid Trust acquired three power transmission assets for Rs 1,410 crore.
  • 8K miles launched proprietary Blockchain platform 8K Health Edge.
  • Mahindra and Mahindra to invest Rs 176 crore in Zoomcar India.
  • Idea Cellular board meeting on Feb. 21, 2018 to approve QIP issue price.

Bulk Deals

  • City Union Bank: Lavender Investments sold 60 lakh shares or 0.9 percent equity at Rs 166 each.

Praxis Home Retail

  • Aadi Financial Advisors LLP acquired 6.26 lakh shares at Rs 161.81 each
  • Pensionskasse Des Bundes Publica sold 1.63 lakh shares at Rs 167.82 each

IPO

  • Aster DM Healthcare IPO closes. The issue was subscribed 1.2 times.

Trading Tweaks

  • Sundaram Finance circuit filter revised to 20 percent and shifted to B group.
  • MOIL ex-date for determining buyback eligibility.

Insider Trades

  • Onkar S Kanwar, promoter of Apollo Tyres, bought 1 lakh shares on Feb. 14.
  • Arun Kumar Pillai, promoter of Sequent Scientific, bought 1 lakh shares on Feb. 12.
  • Lumax Industries promoter bought 34,000 shares on Feb. 8-9.
  • Star Cement promoter sold 32.5 lakh shares on Feb. 14.

Rupee

  • Rupee closed at 63.91/$ versus 64.09/$ on Wednesday.

Top Gainers And Losers

Index Trends

F&O Cues

  • Nifty February futures traded at 10,551, a premium of 5.7 points..
  • February series: Nifty open interest down 2 percent, Bank Nifty OI unchanged.
  • India VIX ended at 16.3, down 5 percent..
  • Maximum open interest for February series at 11,100 call strike (open interest at 52.7 lakh, down 2.2 percent).
  • Maximum OI for February series at 10,500 Put (open interest at 64 lakh, up 1 percent).

F&O Ban

  • In ban: Balrampur Chini, Dish TV, GMR Infra, HDIL, Jain Irrigation, JP Associates, Oriental Bank.
  • New in ban: Jain Irrigation.

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.

Put-Call Ratio

  • Nifty PCR at 1.13 versus 1.08.
  • Nifty Bank PCR at 0.99 versus 0.78.

Stocks Seeing High Open Interest Change

Fund Flows

Brokerage Radar

Macquarie on Punjab National Bank

  • Maintained ‘Underperform’ with price target of Rs 128.
  • Yet another example of poor risk management practices at PSU banks.
  • Funded exposure of Rs 1,700 crore and non-funded exposure of Rs 11,000 crore.
  • If held liable, this would translate to 27 percent of net worth and 43 percent of market cap.
  • If held liable, would wipe out profits made between April 2012 and March 2017.
  • Frauds a periodic occurrence because of poor systems, checks & balances.

JPMorgan on Punjab National Bank

  • Maintained ‘Neutral’ with price target of Rs 195.
  • Fraud detected; Large potential writedown.
  • Expect this event to remain an overhang on stock price in the near term.
  • May be too late to sell but recommend avoiding entering the stock.
  • If liability of Rs 11,300 crore booked, then 15 percent hit to the next fiscal’s estimated book value per share.
  • May also lead to slower revenue growth along with higher funding costs.
  • Total liability nearly represents entire deposit accretion of December quarter.
  • Possible incremental recap from the government.
  • PNB could divest its 33 percent stake in PNB Housing Finance.

Morgan Stanley on Zee Entertainment

  • Maintained ‘Overweight’ with price target of Rs 610.
  • Zee launched its new OTT platform - Zee5.
  • Some content available for free.
  • For premium content there will be monthly subscription.
  • Expect aggressive advertising of this platform over the next several months.

HSBC on SKF India

  • Maintained ‘Buy’; raised price target to Rs 2,300 from Rs 2,000.
  • December quarter’s earnings strong.
  • Automotive business continues to do well.
  • Slower industrial sales negatively impacted earnings.
  • New initiatives and new product lines to support market share driven growth.
  • New distribution centre to allow the company to gain market share for industrial products.

Deutsche Bank on India Equity Strategy

  • Following the sell-off we see attractive risk reward for rural reflation beneficiaries and high growth, high CASA banks.
  • Rural Reflation thrust to gain momentum.
  • RBI’s latest guidelines turn risk-reward firmly in favor of retail-oriented lenders.
  • Strong liabilities franchise emerge as a key differentiator in tightening liquidity scenario.
  • Preferred stocks: HUL, Dabur, M&M, Dalmia Bharat and Shree Cement.
  • Preferred banks: HDFC Bank, IndusInd Bank and Kotak Mahindra Bank.
  • Preferred NBFCs: Shriram Transport Finance, HDFC and M&M Financial Services.

Motilal Oswal on Zee Entertainment

  • Maintained ‘Buy’ with price target of Rs 705.
  • Zee launches digital app – Zee5.
  • Focusing on original content to benefit from shift toward OTT.
  • Offering original content at initial price of Rs 99 per month.
  • Incremental operating cost toward Zee5 could be Rs 50-70 crore.
  • Expect 80 – 100 basis point impact on the operating margin.
  • Expect 24 percent compounded growth rate in earnings per share over the financial years through March 2020, with RoIC of over 30 percent.

Credit Suisse on Apollo Hospitals

  • Upgraded to ‘Outperform’ from ‘Neutral’; raised price target to Rs 1,450 from Rs 1,075.
  • Margins bottoming out; strong growth ahead.
  • Margins for mature hospitals stabilising now.
  • Strong 20 percent compounded growth rate in operating income over the financial years through March 2020.
  • New hospitals show improvement in utilisation and operating income.
  • Pharmacy margins better than expected.
  • Apollo Hospital turnaround pushed out to the financial years ending March 2020.
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