All You Need To Know Going Into Trade On May 4
Asian stocks began trade on a mixed note as investors awaited the monthly U.S. jobs report, and as a rally off the lows in U.S. equities wasn’t enough to send the S&P 500 into positive territory.
Australian stocks were little changed, while South Korean equities slipped. With Japan closed for a public holiday, no equities will trade in Tokyo and Treasuries will remain shut until the London session.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.3 percent lower at 10,671.50 as of 7 a.m.
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Here’s a quick look at all that could influence equities on Friday.
- U.S. stocks rallied back from a four-week low, with major averages bouncing off of key technical levels, but still ended down for the second straight day.
- European shares fell as the U.S. market extended declines amid earnings releases and the start of trade talks between China and America.
- The euro climbed 0.3 percent to $1.1983.
- The British pound declined less than 0.05 percent to $1.357.
- Germany’s 10-year yield fell five basis points to 0.53 percent.
- Britain’s 10-year yield declined seven basis points to 1.39 percent.
- Australia’s S&P/ASX 200 Index was flat.
- South Korea’s Kospi index lost 0.3 percent.
- Futures on Hong Kong’s Hang Seng slid 0.4 percent.
- Futures on the S&P 500 Index dropped 0.2 percent. The underlying gauge fell 0.2 percent Thursday.
Here are some key events coming up this week:
- Nikkei India services and composite PMI for April
- 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 before the data reports due Friday.
- Earnings season continues, with Alibaba due on Friday.
- Reserve Bank of Australia releases its quarterly update of growth and inflation forecasts on Friday.
- Berkshire Hathaway holds its annual shareholders meeting in Omaha, Nebraska on Saturday.
- West Texas Intermediate crude increased 0.1 percent to $68.51 a barrel.
- Brent crude ended 0.1 percent higher at $73.70 per barrel.
- Gold was steady at $1,313.07 an ounce.
- Aluminium halted three-day winning streak; ended 2.5 percent lower at $2,275 per MT.
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Earnings To Watch
- Ambuja Cements
- Bank Of Maharashtra
- Capital First
- Godrej Properties
- Indo Count Industries
- NIIT Technologies
Earnings Reactions To Watch
Vedanta (Q4, YoY)
- Revenue up 22.7 percent at Rs 27,630 crore.
- Net Profit up 81.41 percent at Rs 4,802 crore.
- EBITDA up 6.6 percent at Rs 7,837 crore.
- Margin at 28 percent vs 33 percent.
L&T Finance Holdings (Q4, YoY)
- Income from operations up 27 percent to Rs 2,748 crore.
- Net Profit grew 28.6 percent to Rs 406 crore.
- Gross NPA at 4.80 percent vs 5.49 percent (QoQ).
- Net NPA at 2.34 percent vs 2.87 percent (QoQ).
JSW Energy (Q4, YoY)
- Revenue down 4.7 percent at Rs 1,775 crore.
- Net loss of Rs 483 crore vs net profit of Rs 23.7 crore.
- One-time loss of Rs 418 crore.
- EBITDA down 28.2 percent at Rs 421.4 crore.
- Margin at 23.7 percent vs 31.5 percent.
Thirumalai Chemicals (Q4, YoY)
- Revenue up 8 percent at Rs 331 crore.
- Net profit up 110.5 percent at Rs 40 crore vs Rs 19 crore.
- EBITDA up 56 percent at Rs 70 crore.
- Margin at 21.1 percent vs 14.7 percent.
Orient Cement (Q4, YoY)
- Revenue up 4 percent at Rs 620 crore.
- Net profit down 21 percent at Rs 13 crore.
- Tax crore of Rs 2 crore in base quarter.
- EBITDA down 3 percent at Rs 74 crore.
- Margin at 11.9 percent vs 12.7 percent.
Trent (Q4, YoY)
- Revenue up 18 percent at Rs 529 crore.
- Net profit down 52 percent at Rs 12 crore.
- Exceptional gain of Rs 25 crore in base quarter.
- EBITDA up 82 percent at Rs 25.5 crore.
- Margin at 4.8 percent vs 3.1 percent.
Nucleus Software (Q4, QoQ)
- Revenue up 5 percent at Rs 111 crore.
- Net profit down 6 percent at Rs 17 crore.
- EBIT down 18 percent at Rs 14 crore.
- Margin at 12.6 percent vs 16.0 percent.
Castrol India (Q1, YoY)
- Revenue up 5 percent at Rs 927 crore.
- Net profit flat at Rs 182 crore.
- EBITDA up 4 percent at Rs 274 crore.
- Margin at 29.6 percent vs 29.8 percent.
Hexaware Technologies (Q4, QoQ)
- Revenue up 4.3 percent at Rs 1,049 crore.
- Net profit up 11 percent at Rs 134 crore.
- EBITDA up 2 percent at Rs 147 crore.
- Margin at 14 percent vs 14.3 percent.
HCC (Q4, YoY)
- Revenue up 6 percent at Rs 1,443 crore.
- Net profit down 5 percent at Rs 20 crore.
- EBITDA down 28 percent at Rs 160 crore.
- Margin at 11.1 percent vs 16.5 percent.
Stocks To Watch
- Emami board approves 1:1 bonus issue.
- S&P cuts Bharti Airtel’s rating to BBB-/Negative from BBB-/Stable
- JSW Energy increased capex aim for electric vehicles to Rs 6,500 crore.
- Fortis Healthcare says board to meet on May 10 to consider various bids/proposals received by the company.
- J Kumar Infraprojects wins order worth Rs 445 crore for Pune metro.
- Vedanta India capex guidance $1.5 billion for FY19.
- IRB Infra expects Rs 10,000 crore revenue, Rs 1,000 crore of net profit by FY20.
- Cera Sanitaryware board approves Rs 100 crore capex for FY19.
- InterGlobe Aviation says it has not received any communication from SEBI.
- BASF India approves proposal to transfer paper wet-end and water chemicals business to Solenis.
- Thirumalai Chemicals board approves 10:1 stock split.
- Tata Motors to sell its defense and aerospace portfolio to Tata Advanced Systems Limited (TASL) (a wholly-owned subsidiary of Tata Sons Limited) to unlock their full potential.
- Uniinfo Telecom Service: Systematix Shares and Stocks (India) Limited bought 60,000 shares at Rs 52.9 each.
- York Asian Opportunities Investments Master Fund, L.P. bought 95 lakh shares (1.8 percent) at Rs 157 each.
- York Asian Strategic Metric Master, L.P bought 1.57 crore shares (3 percent) at Rs 157 each.
- York Multi-Strategy Master Fund, L.P. bought 29.60 lakh shares (0.6 percent) at Rs 157 each.
- UBS Principal Capital Asia Ltd sold 2.82 crore shares (5.4 percent) at Rs 157 each.
- Pioneer Distilleries circuit filter revised to 5 percent.
- Jaypee Infratech shifted to T group.
- Prism Cement Ltd.’s name changed to Prism Johnson Ltd.
- Pudumjee Industries Ltd.’s name changed to 3P Land Holdings Ltd.
- KM Sugar Mills promoters sold 45,000 shares on May 2.
- Vishal Fabrics promoter Vedprakash Chiripal acquired 41,250 shares from April 20 – 30.
- Rupee closed at 66.64/$ on Thursday from 66.66/$ on Wednesday.
- Nifty May Futures closed trading at 10,706.5 with premium of 26.9 versus 29.4 points.
- All series: Nifty open interest unchanged, Bank Nifty open interest up 2 percent.
- India VIX at 12.9, up 1.1 percent.
- Max open interest for May series at 11,000 (open interest at 59.7 lakh, open interest down 1 percent).
- Max open interest for May series shifts to 10,500 (open interest at 45 lakh, open interest down 1 percent).
- In ban: PC Jeweller, IRB Infra, Just Dial, Jet Airways.
- New in ban: Just Dial, Jet Airways.
Only intraday positions can be taken in stocks which are in F&O ban. There is a penalty in case of rollover of these intraday positions.
- Nifty PCR at 1.50 versus 1.52
- Nifty Bank PCR at 1.59 versus 1.52
Stocks Seeing High Open Interest Change
Citi on Adani Ports
- Maintained ‘Buy’ with a price target of Rs 575.
- Healthy underlying numbers despite impact on coal volumes.
- Consistent improvement in balance sheet, cash flow and Capex.
- Outlook remains strong; Valuations are attractive.
JP Morgan on Adani Ports
- Maintained ‘Overweight’ with a price target of Rs 440.
- Higher interest and tax rate led to an in-line net profit.
- SEZ income surprises; 2017-18 was record year for SEZ income.
- Company to continue to focus on net debt reduction.
- Free cash flow to increase to Rs 1,750 - 2,000 crore in the current financial year.
Citi on L&T Finance
- Maintained ‘Buy’ with a price target of Rs 235.
- Operationally strong quarter.
- Strong AUM growth, fee income and improved asset quality led March quarter.
- AUM growth led by rural and housing sectors.
Deutsche Bank on Castrol India
- Maintained ‘Buy’ with a price target of Rs 235.
- March quarter was below estimates due to lower than expected volume growth and gross margins.
- Long-term volume growth outlook remains robust.
- Expect robust margins going forward.
Deutsche Bank on MRF
- Maintained ‘Buy’ with a price target of Rs 89,000.
- Operational miss in March quarter due to higher raw material cost.
- Volume growth continues to witness an uptick.
- Recent price hikes to offset increase in commodity costs.
- Expect truck tyre companies to take adequate prices hikes in the current financial year.
- Expect healthy volume growth and high capacity utilisation.
Kotak Securities on MRF
- Downgraded to ‘Reduce’ from Add; maintained price target at Rs 77,000.
- March quarter’s Ebitda was below estimates due to weaker customer mix and higher other expenses.
- Price hikes to help sustain margins at 18-19 percent.
- Expect 10 percent compounded growth rate in revenue over the fiscal 2018-2021.
- Like company’s strong execution track-record and brand-positioning.
- Believe the stock is trading at fair valuation.
Credit Suisse on Pidilite
- Downgraded to ‘Neutral’ from ‘Outperform’; raised price target to Rs 1,050 from Rs 1,000.
- Near-term margins to hurt on high crude inflation.
- Pricing power comes with a lag of 4-6 months.
- Margins near all-time highs; management has guided for a lower range.
- Run up in stock now makes it expensive versus peers.
Edelweiss on Emami
- Maintained ‘Buy’; cut price target to Rs 1,244 from Rs 1,328.
- March quarter’s net profit below estimates owing to one-time MAT credit reversal.
- Core products stable; Kesh King improving.
- Cut earnings per share estimates by 15 percent and 9 percent for the current and the next financial year respectively, to factor in slower off take and heightened ad spends.
- Expect revenue growth to improve led by rural recovery.
Credit Suisse on Emami
- Maintained ‘Outperform’; cut price target to Rs 1,230 from Rs 1,260.
- March quarter was below estimates as margins fell sharply due to a spike in ad spends.
- Some recovery in growth is visible.
- Drags like Kesh King, international and OTC are improving.
- Cut current and next financial year’s estimates by 10 percent to build in increase in ad spends.
Morgan Stanley on Hexaware Tech
- Maintained ‘Underweight’ with a price target of Rs 325.
- Robust quarter of revenue growth; Margins softer than expectation.
- Hexaware’s full-year outlook could turn out to be conservative.
- Focus on maintaining margins while gaining market share.
- Believe the stock is already more than pricing in potential upside.
Morgan Stanley on Edelweiss
- Maintained ‘Overweight’ with a price target of Rs 340.
- Consolidated net profit above estimates.
- Asset quality stable, with GNPL ratio at 1.75 percent.
Credit Suisse on PNB Housing
- March quarter remained fastest growing HFC with healthy asset quality.
- Company to invest in geographic expansion and infrastructure.
- Cut earnings per share estimates for the current and the next financial year by 5 percent and 7 percent respectively on heightened opex investments.
- PNB Housing remains one of the players with highest earnings growth visibility.
CLSA on Vedanta
- Maintained ‘Buy’; cut price target to Rs 390 from Rs 410
- March quarter’s Ebitda was ahead of estimates led by higher volumes and commodity prices.
- Strong volume growth in zinc, oil and aluminium businesses.
- Rising costs in aluminium and zinc hurting though.
- Expect strong compounded growth rate of 17 percent and 24 percent for Ebitda and earnings per share respectively in the fiscal 2019-2020.