Asian stocks were off to a muted start, with Japan and China closed for holidays, as investors weighed the ongoing earnings season against signs of slowing economic growth.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.2 percent to 10,745.50 as of 7:05 a.m.
Here’s a quick look at all that could influence equities on Monday.
- Most U.S. stocks edged higher as the debate continued over whether better-than-forecast corporate earnings are enough to offset signs the economy may be cooling.
- The yield on 10-year Treasuries fell two basis points to 2.96 percent.
- European stocks hold steady as traders assess an onslaught of profit updates and a historic meeting between the leaders of North and South Korea.
- The euro gained 0.2 percent to $1.2131.
- The British pound fell 1 percent to $1.3782.
- Germany’s 10-year yield dipped two basis points to 0.57 percent.
- Britain’s 10-year yield fell six basis points to 1.44 percent.
- The Kospi index gained 0.4 percent.
- Australia’s S&P/ASX 200 Index rose 0.3 percent.
- Futures on Hong Kong’s Hang Seng Index climbed 0.4 percent.
- S&P 500 futures were up 0.1 percent.
- The MSCI Asia Pacific Index gained 0.1 percent.
Here are some key events coming up this week:
- The Federal Open Market Committee begins a two-day meeting on Tuesday. Fed policy makers will probably keep their target rate for overnight bank lending in a range of 1.5 percent to 1.75 percent, economists forecast.
- It’s Golden Week in Japan, with public holidays Monday, Thursday and Friday. China is shut Monday and Tuesday.
- The Reserve Bank of Australia’s monetary policy decision is out Tuesday. The central bank is expected to keep rates on hold, as they’ve been for more than 1 1/2 years.
- The European Commission presents its spring economic forecasts, which include projections for growth, inflation, debt and deficit, and unveils its proposal for the EU’s seven-year budget framework on Wednesday.
- China manufacturing and services purchasing-manager indexes are due, starting Monday.
- Payroll gains in the U.S. probably picked up in April, with the unemployment rate forecast to drop to 4 percent, according to surveys of economists.
- Earnings season continues, with Apple Inc. headlining. Other high profile results include Pfizer Inc., Merck & Co., Cigna Corp., HSBC Holdings Inc., BNP Paribas SA, Standard Chartered Plc, Tesla Inc., BP Plc, McDonald’s Corp. and Adidas AG.
- West Texas Intermediate crude lost 0.1 percent to $68.02 a barrel.
- Gold rose 0.1 percent to $1,324.85 an ounce.
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Nifty Earnings To Watch
- Kotak Mahindra Bank
Other Earnings To Watch
- Container Corp
- Hindustan Zinc
- Prakash Industries
- Som Distilleries
Earnings Reactions To Watch
Reliance Industries Q4 (QoQ)
- Revenue up 15 percent at Rs 84,037 crore.
- Net profit up 3 percent at Rs 8,697 crore.
- Ebitda down 2 percent at Rs 13,425 crore.
- Margin at 16 percent versus 18.8 percent
- Jio ARPU at Rs 137.1.
UPL Q4 (YoY)
- Net profit down 1 percent at Rs 736 crore.
- Revenue up 7 percent at Rs 5,691 crore.
- Ebitda up 8 percent at Rs 1,218 crore.
- Margin at 21.4 percent versus 21.1 percent.
Shree Cement Q4 (YoY)
- Revenue up 15.3 percent at Rs 2,811 crore.
- Net profit up 31 percent at Rs 399 crore.
- Ebitda up 11.5 percent at Rs 629 crore.
- Margin at 22.4 percent versus 23 percent.
Equitas Q4 (YoY)
- Net Interest Income up 15 percent at Rs 279 crore.
- Net profit up 400 percent at Rs 35 crore.
IDFC Q4 (YoY)
- Net Interest Income down 7 percent at Rs 743.5 crore.
- Net profit down 99 percent at Rs 1.6 crore.
RBL Bank Q4 (YoY)
- NII up 42 percent at Rs 500 crore.
- Net Profit up 37 percent at Rs 178 crore.
- Provisions at Rs 113 crore versus Rs 82.3 crore (QoQ).
- Gross NPA at 1.40 percent versus 1.56 percent (QoQ).
- Net NPA at 0.78 percent versus 0.97 percent (QoQ).
Idea Q4 (QoQ)
- Net loss at Rs 962 crore versus net loss of Rs 1,285 crore.
- Revenue down 6 percent at Rs 6,137 crore.
- Ebitda up 18 percent at Rs 1,447 crore.
- Margin at 23.6 percent versus Rs 18.8 percent.
- Other Income up six times to Rs 250 crore.
Shoppers Stop Q4 (YoY)
- Revenue down 7 percent at Rs 850 crore.
- Net profit of Rs 21 crore versus net loss of Rs 36 crore.
- Ebitda flat at Rs 52 crore.
- Margins at 6.1 percent versus 5.7 percent.
NELCO Q4 (YoY)
- Revenue up 5 percent at Rs 39 crore.
- Net profit up 300 percent at Rs 4 crore.
- Ebitda up 100 percent at Rs 8 crore.
- Margins at 20.5 percent versus 10.8 percent.
Merck Q4 (YoY)
- Revenue up 27 percent at Rs 301 crore.
- Ebitda up 84 percent at Rs 42 crore.
- Margin at 13.8 percent versus 9.9 percent.
- Net profit up 53 percent at Rs 22.7 crore.
- Exceptional gain of Rs 6.5 crore related to sale of office property in Mumbai in March quarter.
LG Balakrishnan Q4 (YoY)
- Revenue up 12 percent at Rs 342.5 crore.
- Ebitda up 20 percent at Rs 49 crore.
- Margin at 14 percent versus 13.5 percent.
- Net profit up 4 percent to Rs 22.7 crore.
MCX Q4 (YoY)
- Revenue up 13 percent at Rs 70.6 crore.
- Ebitda up 77 percent at Rs 23 crore.
- Margin at 32.5 percent versus 20.7 percent.
- Net Profit up 56.5 percent at Rs 34.2 crore.
- Tax expenses lower at 24.7 percent versus 32.7 percent.
- Other expenses down 19 percent at Rs 13.6 crore.
Greenply Q4 (YoY)
- Revenue down 21.5 percent at Rs 339 crore.
- Ebitda down 3 percent to Rs 54 crore.
- Margin at 16 percent versus 12.9 percent.
- Net profit up 10 percent at Rs 34.3 crore.
Can Fin Homes Q4 (YoY)
- Revenue from operations up 10.7 percent at Rs 399 crore.
- Net profit up 6.5 percent to Rs 75.5 crore.
- Gross NPA at 0.43 percent versus 0.46 percent (QoQ).
Stocks To Watch
- Aditya Ghosh resigned as president and whole-time director of InterGlobe Aviation.
- Fortis board to consider all binding bids received on May 1.
- Axis Bank board approves increasing borrowing limit to upto Rs 2 lakh crore.
- Indian Oil to invest Rs 4,221 crore in Paradip petrochem plant.
- Wockhardt to consider fund raising in May 4 meeting.
- Jagran Prakashan to buyback upto 1.5 crore shares or 4.82 percent equity at a price of Rs 195.
- Nitesh Estates says arbitral tribunal awarded Rs 42.50 crore to subsidiary in a land dispute.
- RBI says restriction on Tata Chemicals’ share purchase withdrawn. Foreign share holding in Tata Chemicals below threshold.
- Dilip Buildcon says it executed concession agreement with NHAI for orders worth Rs 917 crore.
- PC Jeweller to consider buyback on May 25.
Who’s Meeting Whom
- M&M to meet Wellington Management on April 30.
- VIP Industries promoter DGP Enterprises acquired 14,100 shares on April 23.
- Jindal Drilling promoter Jindal pipes acquired 1 lakh shares on April 23.
- Pioneer Distilleries Ltd.’s circuit filter revised to 10 percent.
- 5Paisa Capital Limited, Kingfa Science & Technology (India) Limited, Vimta Labs last trading day under T group
- Rupee ended at 66.66/$ on Friday versus 66.76/$ on Thursday.
- Nifty May Futures closed trading at 10,723.8 with a premium of 31.8 points versus 14.7 points.
- All series-Nifty OI up 4 percent, Bank Nifty OI up 19 percent.
- India VIX ended at 12.01, down 0.17 percent.
- Max OI for May series at 11,000, OI at 51 lakh, OI up 16 percent.
- Max OI for May series shifts to 10,500, OI at 37.6 lakh, OI up 23 percent.
- Nifty PCR at 1.51 versus 1.48.
- Nifty Bank PCR at 1.64 versus 1.25.
Stocks Seeing High Open Interest Change
Deutsche Bank on Reliance Industries
- Maintained ‘Buy’; hiked price target to Rs 1,180 from Rs 1,150
- March quarter reported strong earnings, led by a robust performance from petchem business.
- Lower throughput, lower GRMs and rupee appreciation impact refining business.
- Jio: Tariff competition impacts APRU; Jio to maintain focus on net adds.
- Expect Jio revenue ramp-up and contribution from core sector projects.
Edelweiss on Reliance Industries
- Maintained ‘Buy’; hiked price target to Rs 1,201 from Rs 1,174
- Reported in-line quarterly results during January-March period on consolidated basis.
- Retail and petchem delivered stellar performances led by volume-led growth.
- Refining: GRM lower than estimate; New projects to revive earnings.
- Expect Jio to be cost competitive and gain market share.
Motilal Oswal on Reliance Industries
- Maintained ‘Buy’ with a price target of Rs 1,150.
- Standalone operating income below estimates due to lower throughput.
- Net profit benefiting from higher other income and lower depreciation.
- Petchem drives standalone profitability.
- Robust volume growth and healthy deltas benefit petchem.
- Jio: Moderate growth pulled down by ARPU cuts.
Kotak on Maruti
- Maintained ‘Add’; cut price target to Rs 9,700 from Rs 10,000.
- Higher other expenses and increase in variable pay lead to slight miss.
- Cut operating income for the current and next financial year by 2-3 percent due to reduction in margin assumptions.
- Believe Maruti’s capacity will be booked for next three years.
- Expect volume to grow at 11 percent compounded over the next three years.
JP Morgan on Maruti
- Maintained ‘Overweight’ with a price target of Rs 10,200.
- March quarter net income was below expectations on lower EBIT margins.
- Higher commodity costs and Gujarat scale-up are headwinds to margins in the current financial year.
- Volume growth to be in double digits despite capacity constraints.
- Expect 12 percent volume growth for the current and next financial year.
CLSA on Maruti
- Maintained ‘Buy’ with a price target of Rs 11,300
- Good growth but margin miss in March quarter.
- Demand outlook remains strong.
- Cost pressures exists but Maruti has levers to offset.
- Cut earnings per share estimates for the current and the next financial year by 3 percent to factor in slightly lower margins.
CLSA on UPL
- Maintained ‘Buy’; cut price target to Rs 940 from Rs 960.
- Weak quarterly results with modest revenue growth across key markets.
- Revenue guidance for the current financial year of 10-12 percent; potential tailwind from stronger pricing.
- UPL to benefit from improving industry dynamics in 2018.
- Cut earnings per share for the current and the next financial year by 6-8 percent, owing to margin cut on increase in input prices.
Investec on UPL
- Maintained ‘Buy’; hiked price target to Rs 1,050 from Rs 975
- March quarter was Operationally in-line.
- Performance in the U.S. is encouraging.
- Control on working capital and reduced gearing are major positives.
- Expect 13 percent compounded growth rate in earnings per share over the fiscal 2018-2020 with Return on equity of 22 percent.
Nomura on Shriram Transport
- Maintained ‘Buy’; hiked price target to Rs 1,900 from Rs 1,750.
- March quarter reported operationally strong performance.
- Higher credit cost/coverage a small negative but conservative.
- Cyclically growth trends very strong; Asset quality trends to improve.
- Expect Shriram to deliver return on equities of 18-19 percent in the current and next financial year.
Morgan Stanley on Shriram Transport
- Maintained ‘Overweight’ with a price target of Rs 1,600
- March quarter reported good underlying numbers.
- Net profit impacted by one-off gains from sale of stake.
- Net profit ex-one-off gains missed due to additional provisions.
- Pre-provisioning operating profit growth strong at 24 percent.
HSBC on SBI Life
- Maintained ‘Buy’; hiked price target to Rs 840 from Rs 835.
- Reported good set of March 2018 full year results.
- SBI Life reported better persistency in all but the 61st month.
- Expect SBI Life to continue to gain market share.
- Focusing on more profitable products such as credit life.
JPMorgan on InterGlobe Aviation
- Maintained ‘Overweight’ with a price target of Rs 1,690.
- Aditya Ghosh to step down from the company.
- Believe operational disruption at IndiGo will be minimal.
- Await more details/clarification from the company.
Kotak Securities on Cummins India
- Maintained ‘Reduce’; cut price target to Rs 715 from Rs 855.
- Absence of drivers of bottom-line beyond market growth.
- Target multiple lowered due to multiple factors.
- Do not see any positive triggers to increase the multiple.
- Factors:- weak exports, margin pressure, competition and lack of clarity on business scope of unlisted sister concerns.