All You Need To Know Going Into Trade On May 16

Stocks in Asia followed their American counterparts lower as geopolitical developments and rising benchmark U.S. yields spurred a return of risk aversion. Equities in Japan and Korea were lower after U.S. stocks halted a four-day rally with the steepest slide in almost two weeks. Australian shares bucked the trend.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.5 percent lower at 10,767 as of 7:05 a.m.

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BQ Live

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

U.S. Market Check

• U.S. stocks halted a four-day rally with the steepest slide in almost two weeks as healthcare and tech shares retreated.
• Earlier, yields on 10-year Treasury notes rose to 3.07 percent, the highest since 2011, after upbeat U.S. retail sales data fueled bets the Federal Reserve may raise interest rates three more times this year.
• Bloomberg’s dollar index steadied close to a 2018 high.

Europe Check

• European stocks were little changed as traders assessed the resilience in U.S. bond yields and awaited clarity from Italian populists trying to nail down their plans to form the country’s next government.

Asian Cues

• The MSCI Asia Pacific Index fell 0.1 percent.
• Topix index fell 0.2 percent.
• Kospi index fell 0.4 percent.
• Australia’s S&P/ASX 200 Index rose 0.1 percent.
• Futures on the S&P 500 Index fell less than 0.05 percent.

Here are some key events coming up this week:

• Chinese Vice Premier Liu He is expected in Washington for more trade talks.
• European Union Chief Brexit negotiator Michel Barnier briefs European affairs ministers on the status of talks with the U.K.
• U.K. Prime Minister Theresa May meets with her Brexit cabinet Tuesday to discuss plans for a post-withdrawal customs union.
• U.S. industrial production numbers are due this week.

Commodities Check

• West Texas Intermediate crude fell 0.4 percent to $71.00 a barrel.
• Brent crude ended 0.5 percent lower at $78.08 per barrel.
• Aluminium traded 1.2 percent higher at $2,343 per metric tonne.
• Gold traded below $1,300 an ounce for the first time since December and the yen dropped.
• LME copper rose 0.1 percent to $6,815.00 per metric tonne.

Indian ADRs

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Stocks To Watch

• ArcelorMittal transfers Rs 7,000 crore to SBI account to meet Essar bid norm.
• Reliance Communications admitted into insolvency by NCLT bench.
• EPC Industries to form joint venture with Israel’s Top Greenhouse.
• Shree Pushkar acquired 40,000 sq metre land at MIDC, Ratnagiri for expansion purpose.

Nifty Earnings To Watch

• Hindalco
• ITC
• Tata Steel

Other Earnings To Watch

• AIA Engineering
• Alembic Pharmaceuticals
• Brigade Enterprises
• GSFC
• JK Lakshmi Cement
• JSW Steel
• Jyothy Laboratories
• Muthoot Finance
• NIIT
• Praj Industries
• Prataap Snacks
• PTC India
• Tasty Bite Eatables
• Teamlease Services
• TVS Motor Company
• Welspun India
• Zee Media

Earnings Reaction To Watch

PI Industries (Q4. YoY)

• Revenue up 3 percent at Rs 625 crore.
• Net profit down 22 percent at Rs 105 crore.
• Ebitda down 12 percent at Rs 135 crore.
• Margin at 21.6 percent versus 25.8 percent.

Monsanto India (Q4, YoY)

• Revenue up 10 percent at Rs 157 crore.
• Net profit up 66 percent at Rs 53 crore.
• Ebitda up 50 percent at Rs 54 crore.
• Margin at 34.4 percent from 25.2 percent.

Endurance Technologies (Q4, YoY)

• Revenue up 29 percent at Rs 1,782 crore.
• Net profit up 39 percent at Rs 116 crore.
• Ebitda up 36 percent at Rs 258 crore.
• Margin at 14.5 percent.

Ineos Styrolution India (Q4, YoY)

• Revenue up 29 percent at Rs 510.5 crore.
• Net profit up 7 percent at Rs 32 crore.
• Ebitda up 17 percent at Rs 55.5 crore.
• Margin at 10.9 percent from 12 percent.

Britannia Industries (Q4, YoY)

• Revenue up 13 percent at Rs 2,537.5 crore.
• Net profit up 25 percent at Rs 264 crore.
• Ebitda up 29 percent at Rs 396.5 crore.
• Margin at 15.6 percent from 13.7 percent.

Crompton Greaves Consumer (Q4, YoY)

• Revenue up 8 percent at Rs 1,126 crore.
• Net profit up 32 percent at Rs 103 crore.
• Ebitda up 27 percent at Rs 164 crore.
• Margin at 14.6 percent from 12.3 percent.

Clariant Chemicals (Q4, YoY)

• Revenue down 4 percent at Rs 244 crore.
• Net profit down 75 percent at Rs 2 crore.
• Ebitda down 45 percent at Rs 11 crore.
• Margin at 4.5 percent from 7.9 percent.

Shakti Pumps (Q4, YoY)

• Revenue down 22 percent at Rs 131 crore.
• Net profit down 20 percent at Rs 9.6 crore.
• Ebitda flat at Rs 23 crore.
• Margin at 17.6 percent from 13.8 percent.

JHS Svendgaard Laboratories (Q4, YoY)

• Revenue up 38 percent at Rs 38 crore.
• Net profit down 84 percent at Rs 3 crore.
• Tax credit of Rs 17 crore in base quarter.
• Ebitda up 14 percent at Rs 4 crore.
• Margin at 10.5 percent from 12.7 percent.

Bulk Deals

• Reliance Communications: Sistema Shyam Teleservices sold 1.54 crore shares or 0.6 percent equity at Rs 12.63 each.
• Alok Industries: Catalyst Trusteeship sold 1.05 crore shares or 0.8 percent equity at Rs 1.57 each.

Who’s Meeting Whom

• Mahindra Logistics to meet Ask Investments and DSP Blackrock from May 16 – 21.
• Siemens to meet New India Assurance, GIC and Wellington Management Group from May 16 – 18.

Insider Trades

• Apollo Hospitals promoter Indian Hospitals Corp acquired 10,184 shares on May 10.
• Plastiblends India promoter Jyoti Kabra acquired 10,000 shares from May 9 – 10.
• Bodal Chemicals promoter Suresh Patel acquired 2.97lakh shares on May 14.

(As reported on May 15)

Rupee

• Rupee closed at 68.11/$ on Tuesday versus 67.52/$ on Monday; lowest level since Jan. 24, 2017.

F&O Cues

• Nifty May Futures closed trading at 10,818.6 with premium of 16.8 points versus 8 points.
• All series-Nifty open interest down 2 percent and Bank Nifty open interest up 2 percent.
• India VIX ended at 13.1, down 7.5 percent
• Max open interest for May series at 11,000, open interest at 63.7 lakh, open interest up 4 percent.
• Max open interest for May series at 10,500, open interest at 60.6 lakh, open interest down 9 percent.

F&O Ban

• In ban: Dewan Housing, Jet Airways, JP Associates, Justdial, PC Jewelers, Wockhardt
• New in ban: PC Jewellers
• Out of ban: IRB Infra

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

Active Stock Futures

Put-Call Ratio

• Nifty PCR at 1.59 versus 1.64.
• Nifty Bank PCR at 1.03 versus 1.10.

Fund Flows

Brokerage Radar

CLSA on Lupin

• Maintained ‘Buy’, with a price target of Rs 1,000.
• US business trades at attractive valuation of <2x FY19 sales.
• FY19 is expected to be a challenging year and recovery is expected from March 2019 onwards.
• High single digit price erosion expected in the current financial year.

Credit Suisse on Lupin

• Maintained ‘Neutral’ with a price target of Rs 770
• Weak FY19 outlook for Japan and the U.S., and margins keep us neutral.
• FY19 sales growth guidance is for single digit growth.
• Next key event is likely re-inspection of Goa and Indore plants in December quarter.

Credit Suisse on PNB

• Downgraded to ‘Neutral’ from ‘Outperform’, cur price target to Rs 88 from Rs 188.
• Capital depletion will lead to loan book contraction.
• Could incur losses even in FY19 on residual fraud provisions.
• PNB will likely need a Balance Sheet contraction to conserve capital.

Macquarie on CG Consumer

• Maintained ‘Outperform’, with a price target of Rs 292.
• The key positive takeaway was the operating margins expansion.
• Revenue growth decent but lags peers.
• Need to capitalize with new product offering.

Credit Suisse on CG Consumer

• Maintained ‘Outperform’, with a price target of Rs 315.
• Margin expansion continues to play out, led by lighting.
• Go-to-market changes, potential new category entry are key drivers.