A man flies a kite on the Bund while buildings of Pudong’s Lujiazui financial district stand across the Huangpu River as the sun rises in Shanghai, China (Photographer: Qilai Shen/Bloomberg)

All You Need To Know Going Into Trade On July 18

Asian stocks advanced after an upbeat assessment on the U.S. economy from Federal Reserve Chairman Jerome Powell comforted investors wary of a blowout in protectionism.

Equities climbed in Japan, Australia and South Korea at the open, while futures signaled a firmer start in Hong Kong. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.4 percent higher at 11,065 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

  • The Nasdaq Composite Index closed at a record high as a recovery in technology shares emboldened investors and Federal Reserve Chairman Jerome Powell reiterated his upbeat assessment of the economy.
  • The yield on 10-year Treasuries held at 2.86 percent.

Also read: Fed's Powell Says Trade Barriers Threaten Wages and Growth

Europe Market Check

European stocks posted a small gain after reversing earlier declines as U.S. shares pushed higher on expectations the Federal Reserve won’t hike rates too aggressively.

All You Need To Know Going Into Trade On July 18
  • The euro slipped 0.4 percent to $1.1664.
  • The British pound dropped 0.9 percent to $1.3115.
  • Italian 10-year yields fell 11 basis points to 2.47 percent.
  • Germany’s 10-year yield fell two basis points to 0.35 percent.

Also read: U.K.'s May in Brexit Turmoil With Parliament Majority Slashed

Asian Cues

  • Japan’s Topix index rose 0.8 percent.
  • Australia’s S&P/ASX 200 Index gained 0.4 percent.
  • South Korea’s Kospi index was up 0.9 percent.
  • Hong Kong’s Hang Seng Index futures were up 0.5 percent.
  • Futures on the S&P 500 Index rose 0.1 percent.
  • Australia’s 10-year bond yield fell three basis points to 2.63 percent.
  • The Japanese yen fell 0.1 percent to 112.99 per dollar, trading around its weakest since January.
  • China’s yuan fell 0.1 percent to $6.7279.

Also read: Templeton, BlackRock Say Now's the Time to Buy Emerging Markets

Commodity Cues

  • West Texas Intermediate crude fell 0.4 percent to $67.78 a barrel.
  • Brent crude traded 0.5 percent lower at $71.79 per barrel.
  • Gold was little changed at $1,227.64 an ounce. Earlier it fell more than 1 percent.

Shanghai Exchange

  • Steel snapped two-day losing streak; up 0.4 percent.
  • Aluminium traded flat.
  • Zinc snapped six-day losing streak; up 0.5 percent.
  • Copper traded lower for second day; down 0.5 percent.
  • Rubber traded higher for second day; up 0.2 percent.

Also read: Here’s One Commodity That May Benefit From Trump’s Trade War

Stories That You Might’ve Missed

Here are some key events coming up this week:

  • Monsoon Session of Parliament will begin today
  • Earnings season continues, with reports due from companies including: Morgan Stanley, American Express, Microsoft, Taiwan Semiconductor Manufacturing, Unilever and IBM.
  • Euro-zone inflation data for June is expected on Wednesday to show the annual rate inched higher to 2 percent.

Also read: Six Controversial Bills Up For Discussion In The Monsoon Session

Stocks To Watch

  • IDBI Bank board seek government’s view on LIC’s proposal to buy 51 percent stake.
  • HDFC Bank to allot 3.9 crore shares to parent HDFC at Rs 2174.09 per share.
  • PNC Infratech bagged order worth Rs 1,157 crore for highway project in Karnataka.
  • 5Paisa Capital board approved 1:1 rights issues at Rs 80 per share.
  • Kridhan Infra JV won Rs 222.6 crore order for highway project.
  • Tejas Networks implements 100G DWDM network for MCM Telecom in Mexico.
  • Rolta India signed pact to implement revised restructuring of bonds.
  • Kansai Nerolac completed acquisition of 55 percent stake in RAK Paints Bangladesh for Rs 41.5 crore.
  • Allahabad Bank, Andhra Bank, Corporation Bank, PNB, IOB in focus as government may infuse Rs 11,396 crore in five state-owned banks, says government official. Capital to be used by banks to pay interest due on AT1 bonds.

Nifty Earnings To Watch

  • Ultratech Cement

Other Earnings To Watch

  • Bandhan Bank
  • GHCL
  • JK Tyre
  • JM Financial
  • Mahindra CIE Automotive
  • Mastek
  • Mindtree
  • NIIT Tech
  • Reliance Communications
  • Sasken Technologies

Earnings Reaction To Watch

Zee Entertainment (Q1, YoY)

  • Revenue up 15 percent at Rs 1,772 crore.
  • Net profit up 31.5 percent at Rs 326 crore.
  • Ebitda up 17 percent at Rs 565.6 crore.
  • Margin at 31.9 percent versus 31.4 percent.

Also read: Q1 Results: Zee Entertainment Profit Matches Analyst Estimates In June Quarter

Rallis India (Q1, YoY)

  • Revenue up 30 percent at Rs 573 crore.
  • Net profit up 22 percent at Rs 55 crore.
  • Ebitda up 22 percent at Rs 83.5 crore.
  • Margin at 14.6 percent versus 15.5 percent.

Nucleus Software Exports (Q1, QoQ)

  • Revenue up 2 percent at Rs 113 crore.
  • Net profit up 3.5 percent at Rs 17.6 crore.
  • Ebit up 21 percent at Rs 17 crore.
  • Margin at 15 percent versus 12.6 percent.

Sintex Industries (Q1, YoY)

  • Revenue up 34 percent at Rs 925 crore.
  • Net profit up 11 percent at Rs 39 crore.
  • Ebitda up 43 percent at Rs 110 crore.
  • Margin at 11.9 percent versus 11.2 percent.

5Paisa Capital (Q1, YoY)

  • Revenue up 4.1 times at Rs 9.1 crore.
  • Net loss of Rs 5.6 crore versus net loss of Rs 6.2 crore.
  • Ebitda loss of Rs 6.7 crore versus a loss of Rs 6.9 crore.

Crisil (Q1, YoY)

  • Revenue up 7 percent at Rs 436 crore.
  • Net profit up 15 percent at Rs 77 crore.
  • Ebitda up 5 percent at Rs 108 crore.
  • Margin at 24.8 percent versus 25.2 percent.

Jindal Stainless (Q1, YoY)

  • Revenue up 56 percent at Rs 3,147 crore.
  • Net profit at Rs 91 crore versus Rs 41.5 crore.
  • Ebitda up 50 percent at Rs 375 crore.
  • Margin at 11.9 percent versus 12.4 percent.

Tata Sponge Iron (Q1, YoY)

  • Revenue up 49.1 percent at Rs 260.9 crore.
  • Net profit at Rs 45.6 crore versus Rs 30.6 crore.
  • Ebitda up at Rs 60.2 crore versus Rs 38.7 crore.
  • Margin at 23.1 percent versus 22.1 percent.

8K Miles Software Services (FY18 versus FY17)

  • Revenue up 61 percent at Rs 849 crore.
  • Net profit up 64 percent to Rs 172 crore.
  • EBIT up 56 percent to Rs 267 crore.
  • Margin at 31.5 percent versus 32.4 percent.

Indian ADRs

All You Need To Know Going Into Trade On July 18

New Offerings

  • TCNS Clothing Co. IPO at Rs 714-716 a share opens; close on July 20. (More details here)
  • HDFC AMC IPO price band set at Rs 1,095-1,100 per share; offer ope July 25, close July 27.

Bulk Deals

  • Aksharchem: BNP Paribas Arbitrage sold 43,448 shares or 0.5 percent equity at Rs 500.14 each.
  • PC Jeweller: Well Management sold 37.45 lakh shares or 0.9 percent equity at Rs 85.43 each.

Who’s Meeting Whom

  • PSP Projects to meet Emkay Global Financial Services on July 18.

Insider Trades

  • Waterbase promoter KCT Management Services Pvt Ltd acquired 46,056 shares from July 11–12.
  • MEP Infra promoter A J Tolls Pvt Ltd acquired 2.20 lakh shares from July 13–16.
  • Sadbhav Infra promoter Sadbhav Engineering Ltd acquired 3.68 lakh shares from July 13–16.

Trading Tweaks

  • M.M.Forgings Limited ex date for 1:1 bonus

Money Market Update

  • Rupee closed at 68.46/$ on Tuesday from 68.57/$ on Monday.
  • Sovereign bonds rise with yields at 7.4 percent, lowest levels since May.

F&O Cues

  • Nifty July Futures closed trading at 11,023.7 premium of 15.7 points versus 7 points.
  • July series: Nifty open interest up 2 percent; Bank Nifty open interest up 3.5 percent.
  • India VIX ended at 12.8, down 1 percent.
  • Max open interest for July series at 11,000 Call (open interest at 35.3 lakh, down 11 percent).
  • Max open interest for July series at 10,800 Put (open interest at 46.5 lakh, up 13 percent).

F&O Ban

  • In ban: Adani Enterprises, Adani Power, Jet Airways.

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

Put Call Ratio

  • Nifty PCR at 1.68 versus 1.62
  • Nifty Bank PCR at 1.15 versus 0.73

Fund Flows

All You Need To Know Going Into Trade On July 18

Brokerage Radar

CLSA on ITC

  • ITC has become the second-largest FMCG firm in India.
  • Meaningful profits still some time away.
  • Hurdles: Aggressive launches, steep learning curve in personal care and tough retail environment for apparels.
  • FMCG forms 13 percent of price target; could be higher on peer multiples.

BoFA-ML on Zee Entertainment

  • Maintained ‘Underperform’ with a price target of Rs 532.
  • June quarter was largely inline with estimates.
  • Marketing on "Zee5" will pick in current quarter.
  • Zee would grow at the rate higher than industry in 2018-19.
  • Underperform as valuations high in context of growth and limited clarity on traction of Zee5.

Edelweiss on Federal Bank

  • Maintained ‘Buy’ with a price target of Rs 130.
  • June quarter earnings show sustained buildup in operating.
  • rhythm along with normalisation of asset quality.
  • Core profitability gaining momentum and becoming more predictable.
  • June performance reinforces our view that FB is on course to deliver return of assets and return of equity of 1 percent and 13 percent by March 2020.

HSBC on L&T Infotech

  • Initiated ‘Buy’ with a price target of Rs 2,100, implying a potential upside of 13.5 percent from current levels.
  • Strong brand, ability to penetrate large accounts and large deal wins support strong growth.
  • Expect organic revenue to grow above industry average CAGR of 15 percent over FY18-21.
  • Expect margins to improve by 250 basis points, led by operational efficiency and INR depreciation
  • Better organic growth warrants higher valuation.

Macquarie on Ashok Leyland

  • Maintained ‘Underperform’ with a price target of Rs 113.
  • June quarter’s operating income was below estimates.
  • Volume growth drives margin improvement.
  • Domestic medium and heavy commercial vehicle market share at three-year low.
  • Underperform on near term demand uncertainty, high competitive intensity and expensive valuations.

Citi on Glenmark Pharma

  • Maintained ‘Neutral’ with a price target of Rs 640.
  • Received approval of gWelchol suspensiona - $73 million brand in the U.S.
  • Competition is difficult to predict.
  • Market share gains key to track.
  • Execution in the U.S. is key to sustained recovery

Citi on Shriram Transport Finance

  • Maintained ‘Buy’ with a price target of Rs 1,580.
  • SHTF sees asset quality improving gradually with gross NPA ratio declining.
  • Expect net interest margins to sustain despite rise in yields.
  • Merger with Shriram City Union a possibility.
  • Expect 18-20 percent growth rate; can achieve 18 percent RoE in two years.

JPMorgan on ONGC

  • Maintained ‘Overweight’ with a price target of Rs 265.
  • Fears of subsidy, acquisition of GSPC's KG block, impending HPCL merger led to de-rating.
  • Formal restructuring refining and petchem assets would be a positive.
  • Net beneficiary of rupee depreciation and higher domestic gas prices.
  • Higher cess is more likely than an explicit subsidy.
  • Stock lacks immediate catalysts; believe risk-reward favourable for long term.