Traders monitor data on banks of desktop computer monitors on the trading floor in Essen, Germany. (Photographer: Jasper Juinen/Bloomberg)

All You Need To Know Going Into Trade On July 16

Asian stocks began the week in a mixed fashion as traders assessed the sustainability of last week’s relief rally ahead of a slew of Chinese economic figures.

Equities in Sydney fell, while shares in South Korea were gained in early trading. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.1 percent higher at 11,039 as of 6:50 a.m.

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BQ Live

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

U.S. Market Check

  • Stocks edged higher as an ongoing pause in trade tensions outweighed a mixed start to earnings season.
  • The yield on 10-year Treasuries dipped two basis points to 2.83 percent Friday.
All You Need To Know Going Into Trade On July 16

Also read: Trump Calls European Union a U.S. ‘Foe,’ Citing Trade Tensions

European Market Check

  • European stocks posted a second consecutive weekly gain as investors turned their attention to the ongoing earnings season amid a lull in the U.S.-China trade conflict.
All You Need To Know Going Into Trade On July 16

Also read: May Says Trump Advised Her to Sue the EU

Asian Cues

  • Australia’s S&P/ASX 200 Index fell 0.3 percent.
  • South Korea’s Kospi index gained.
  • Futures on Hong Kong’s Hang Seng added 0.1 percent.
  • Futures on the S&P 500 Index were up 0.1 percent.

Commodity Cues

  • West Texas Intermediate crude declined 0.5 percent to $70.66 a barrel.
  • Brent crude traded 0.4 percent lower at $75.04 per barrel.
  • Gold fell 0.2 percent to $1,241.73 an ounce.

Shanghai Exchange

  • Steel snapped five-day winning streak; down 0.4 percent.
  • Aluminium traded lower for second day; down 0.3 percent.
  • Zinc snapped four-day losing streak; up 0.6 percent.
  • Copper traded higher for third day; up 0.3 percent.
  • Rubber traded lower for second day; down 0.1 percent.

Stories You Might’ve Missed

Here are some key events coming up this week:

  • Economists forecast China will report second quarter GDP growth slowed to 6.7 percent from 6.8 percent in the previous quarter, a result that could underscore concerns that the spat with the U.S. is already starting to have an impact on the world’s biggest trading nation.
  • Earnings season continues with reports due from companies including: Bank of America, BlackRock, Goldman Sachs, Morgan Stanley, American Express, Netflix, Microsoft, Taiwan Semiconductor Manufacturing, Unilever, Johnson & Johnson and IBM.
  • U.S. President Trump and Russian President Vladimir Putin hold their first summit together.
  • Fed’s Powell delivers the semi-annual Monetary Policy Report to the Senate Banking Committee and answers lawmakers’ questions.

Stocks To Watch

  • Infosys announced 1:1 bonus issue.
  • Indivior won preliminary injunction against generic rival Dr. Reddy’s for Suboxone.
  • PC Jeweller withdrew buyback offer as it does not get NOC from bankers.
  • Moody’s downgraded credit rating of Tata Motors by one notch due to weaker consolidated credit matrix.
  • Just Dial to consider buyback of equity shares on July 20.
  • WABCO signed first power steering system export deal in India to supply Tata Motors.
  • Vedanta identified as “H1 Qualified Interested Bidder” for GMR Chhattisgarh Energy Ltd by consortium of lenders.
  • Cochin Shipyard won shipbuilding contract from Inland water Authority of India worth Rs 102.6 crore.
  • HMT transferred remaining seven acres of land at Tumkur to ISRO.
  • HDFC MF received SEBI go ahead for IPO (Economic Times).
  • BK Birla group company Kesoram may demerge ailing tyre business (Times of India).
  • Aurobindo Pharma to acquire Apotex International Inc.’s commercial operations in five European countries for € 74 million.
  • Sterlite plant closure to hit 2-3 percent profit of Vedanta group (Business Standard).
  • Dalmia Bharat eyes acquisition as Binani Cement fate hangs in balance (Business Standard).
  • Jindal Steel & Power has settled dispute with Zee Media. Both the parties have withdrawn the allegations against each other.
  • Supreme Court to hear Jaiprakash Associates’ matter today regarding the purpose of considering the issue of the rights of the home buyers and the capability of JAL and JIL to construct the projects.

Data To Watch

  • 12pm: India June wholesale price inflation YoY, estimate 5.23 percent, prior 4.43 percent.

Earnings To Watch

  • Hindustan Unilever
  • Jay Bharat Maruti
  • Sintex Plastics Technology

Earnings Reaction To Watch

Infosys (Q1, QoQ)

  • Revenue up 6 percent at Rs 2831 crore.
  • Net profit down 2 percent at Rs 3612 crore.
  • EBIT down 1 percent at Rs 4537 crore.
  • Margin at 23.7 percent versus 24.7 percent.

Also read: Q1 Results: Infosys Profit Misses Estimates In June Quarter

Bajaj Corp (Q1, YoY)

  • Revenue up 12 percent at Rs 221 crore.
  • Net profit down 2 percent at Rs 54 crore.
  • Other Income of Rs 11 crore in base quarter
  • EBITDA up 15 percent at Rs 68.5 crore.
  • Margin at 31 percent versus 30.2 percent.

BEPL (Q1, YoY)

  • Revenue down 10 percent to Rs 202 crore.
  • Ebiitda down 7 percent to Rs 27.5 crore.
  • Margin at 13.6 percent versus 13.2 percent.
  • Net profit down 0.7 percent to Rs 16.8 crore.
  • Company dropped its capacity expansion to 137 KTPA plans.
  • Aims to achieve 75 percent capacity utilisation for 2018-19 with 100 KTPA plant.

DCB Bank (Q1YoY)

  • Net interest income up 17 percent to Rs 273 crore.
  • Net profit up 6.6 percent to Rs 69.5 crore.
  • GNPA up 8.6 percent to Rs 400.6 crore (QoQ).
  • NNPA up 5 percent to Rs 154 crore (QoQ)
  • GNPA ratio at 1.86 percent versus 1.79 percent.
  • NNPA ratio at 0.72 percent versus 0.72 percent.

CCL Products (Q1, YoY)

  • Revenue up 22 percent to Rs 218 crore.
  • Ebitda up 26 percent to Rs 42 crore.
  • Margin at 19.2 percent versus 18.5 percent.
  • Net profit up 17 percent to Rs 24 crore.

Bulk Deals

  • Solara Active Pharma Sciences: Reliance Strategic Investments sold 1.36 lakh shares at Rs 150.24 each.

AU Small Finance Bank

  • Kotak MF bought 36.5 lakh shares 1.3 percent equity at Rs 630 each.
  • International Finance Corporation sold 1.20 crore shares or 4.2 percent equity at Rs 630 each.

Godrej Properties

  • Jasmine Capital Investments PTE bought 21.96 lakh shares or 1 percent equity at Rs 704.35 each.
  • Cinnamon Capital sold 21.96 lakh shares or 1 percent equity at Rs 704.35 each.

Prestige Estates

  • Jasmine Capital Investments PTE bought 39.46 lakh shares or 1.1 percent equity at Rs 262.6 each.
  • Cinnamon Capital sold 39.46 lakh shares or 1.1 percent equity at Rs 262.6 each.

Also read: Ghosts of Loans Past Coming Back to Haunt India's States

Who’s Meeting Whom

  • Eris Lifesciences to meet Prabhudas Lilladher on July 16.
  • Tata Steel to meet LIC, Goldman Sachs and SBI Life Insurance of July 17 and July 18.

Insider Trades

  • Omax Autos promoter Devashish Mehta sold 15,000 shares on July 10.
  • Divi’s Lab promoter Madhusudana Rao Divi sold 10,000 shares on July 11.
  • Man infraconstruction ltd promoter Vatsal Shah acquired 54,500 shares on July 12.

As reported on July 13

Rupee

  • Rupee ended at 68.53 a dollar on Friday versus 68.57/$ on Thursday.

Top Gainers And Losers

F&O Cues

  • Nifty July Futures closed trading at 11,020 premium of one point versus discount of seven points.
  • July series-Nifty OI unchanged & Bank Nifty OI down 3 percent.
  • India VIX ended flat at 12.3, down 1.2 percent.
  • Max OI for July series at 11,000 Call, OI at 33.2 lakh, OI down 13 percent.
  • Max OI for July series at 10,600 Put, OI at 50.3 lakh, OI down 2 percent.

F&O Ban

  • In Ban: Jet Airways
  • New in Ban: None
  • Out of Ban: None

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.

Stocks Seeing High Open Interest Change

Put Call Ratio

  • Nifty PCR at 1.79 versus 1.73.
  • Nifty Bank PCR at 1.00 versus 1.10.

Fund Flows

All You Need To Know Going Into Trade On July 16

Brokerage Radar

Investec on UPL

  • Maintained ‘Buy’; Cut price target to Rs 785 from Rs 1,050.
  • Share prices decline on depreciating Brazilian Real and on news around Arysta acquisition.
  • Investors concerned regarding the valuation of the potential deal.
  • Current price factors in the possible risks from such a deal.
  • UPL’s conservative approach to acquisitions in the past provides assurance.
  • Lower price target to factor heightened volatility in business environment and multiples of global generic agrochem peers.

Nomura on Dr. Reddy’s

  • Maintained ‘Buy’ with a price target of Rs 2,704.
  • Preliminary Injunction (PI) in favour of Indivior and against Dr Reddy's.
  • Dr. Reddy’s appeal on PI verdict will take 2-6 months.
  • PI would adversely impact as competition could intensify for drug.
  • Attribute Rs 60 percent share for gSuboxone opportunity in price target.

CLSA on Aurobindo Pharma

  • Maintained ‘Underperform’ with a price target of Rs 630.
  • Further inorganic expansion in the EU.
  • EV to previous fiscal sales multiple appears low but there is limited meaning for sales multiple.
  • Deal increases European exposure in total sales to 31 percent.

Brokerages On Infosys

Motilal Oswal

  • Maintained ‘Buy’ with a price target of Rs 1,550.
  • June quarter’s constant currency revenue growth came in-line with estimate
  • Strong growth seen in energy and manufacturing on a yearly basis.
  • Though guidance retained, expect better margins.
  • Deals and Digital are positives; Concerned on attrition and BFS sector
  • Infosys will achieve the lower end of its guidance in 2018-19.

Investec

  • Maintained ‘Buy’; raised price target to Rs 1,440 from Rs 1,320.
  • Margin performance drives upgrades.
  • Commentary suggests better growth going forward.
  • Weakness in BFSI is likely over.
  • Assume marginal narrowing of valuation gap with TCS.

Citi

  • Maintained ‘Neutral’; raised price target to Rs 1,315 from Rs 1,285.
  • Largely inline Q1 revenues and EBIT margins.
  • Flattish BFSI and high attrition are key concerns.
  • Stock to be supported by sector sentiments, pending capital return and bonus announcement.