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

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

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

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

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

Index Trends

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

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

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

Fund Flows

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

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.