People jog as Singapore flyer stands in the background in Singapore, on Sunday. (Photographer: SeongJoon Cho/Bloomberg)  

All You Need To Know Going Into Trade On July 20

Asian stocks opened to a mixed start after losses in U.S. equities, which were weighed down by declines in financial shares. The offshore yuan edged up after sliding to the weakest in more than a year.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fluctuated between gains and losses to trade at 10,982 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. equities finished lower for the first time in three days as financial shares led declines.
  • The dollar swung between gains and losses and Treasuries strengthened after President Donald Trump criticised the Federal Reserve for raising interest rates. The yield on 10-year Treasuries fell three basis points to 2.84 percent.

Europe Market Check

  • European stocks fell amid mixed earnings reports as lower metal prices weighed on mining companies.
All You Need To Know Going Into Trade On July 20
  • The euro was little changed at $1.1639.
  • The British pound dropped 0.5 percent to $1.3007.
  • Italian 10-year yields were little changed at 2.51 percent.
  • Germany’s 10-year yield fell one basis point to 0.33 percent.

Commodity Cues

  • West Texas Intermediate crude rose 0.9 percent to $69.32 a barrel.
  • Brent crude traded 0.3 percent higher at $72.79 per barrel.
  • Gold fell 0.4 percent to $1,222.75 an ounce, after reaching the weakest level in more than a year.

Shanghai Exchange:

  • Steel snapped two-day winning streak; down 0.1 percent.
  • Aluminium traded lower; down 0.4 percent.
  • Zinc snapped two-day winning streak; down 0.4 percent.
  • Copper traded lower; down 1 percent.
  • Rubber traded lower for second day; down 0.4 percent.

Stories That You Might’ve Missed

  • BRICS bank to boost South African loans by as much as $600 million.
  • Return of India coalition politics threatens Modi ahead of polls.
  • India likely to lose trade dispute with U.S., says Commerce Secretary.
  • Who stands where is what the no-confidence vote will reveal.
  • Mob Lynchings: WhatsApp at risk of being labelled “Abettor”
  • Foreign tech workers face higher hurdles in Visa applications.
  • Azim Premji says early investments in disruptive tech has yielded success.
  • Copper dips below $6,000 as China sends metals into freefall.
  • Comcast drops out of bidding war for Fox to focus on Sky.
  • Microsoft sales top estimates with more clients signing up for cloud.
  • Trump criticises the Fed, breaking another taboo.
  • This man rewrites the genetic code of animals.
  • The startup is selling generic Viagra and Rogaine to the Instagram crowd.
  • Japan’s $150 chicken skewers are coming to New York City.

The Big Event To Watch

The Lok Sabha will debate the no-confidence motion against the Narendra Modi government. While the ruling coalition is expected to easily defeat the motion, the outcome will reveal which group has been more successful in pulling smaller and non-aligned parties into its fold.

Also read: Who Stands Where Is What The No-Confidence Vote Will Reveal

Indian ADRs

All You Need To Know Going Into Trade On July 20

Stocks To Watch

  • NCLT approved JSW Steel-Aion resolution plan for Monnet Ispat and Energy; written order is awaited.
  • Fortis EGM on Aug 13 to seek shareholders nod for stake sale to IHH Healthcare.
  • Alembic Pharma receives EIR from U.S. FDA for API facility at Karakhadi, Gujarat. All plants of the drugmaker are now FDA compliant.
  • Andhra Bank clarified that exposure to Sterling group at Rs 1143.85 crore classified as NPA.
  • Gujarat Sidhee Cement halted operations of Kiln and upstream equipment in cement factory due to heavy rainfall.
  • Hatsun Agro Product proposed to set dairy manufacturing plant in Maharashtra, to be commissioned before Dec 2019.
  • Parag Milk Food, Prabhat Dairy: Maharashtra government announced Rs 25 per litre as minimum rate of milk for dairy farmers.
  • Reliance Communications to meet bond holders for a proposal relating to restructuring of bonds in London on Aug 10.

Nifty Earnings To Watch

  • Bajaj Auto
  • Wipro

Other Earnings To Watch

  • Atul
  • Bata India
  • Ceat
  • Havells India
  • HDFC Standard Life Insurance
  • Kansai Nerolac Paints
  • L&T Finance Holdings
  • MCX
  • Zee Media Corporation

Earnings Reaction To Watch

Bajaj Finserv (Q1, YoY)

  • Revenue up 16.4 percent at Rs 8,770 crore.
  • Net profit up 41.3 percent at Rs 825.8 crore.
  • Asset Under Management up 35 percent at Rs 93,314 crore.

ABB India (Q2, YoY)

  • Revenue up 21.5 percent at Rs 2,712.7 crore.
  • Net profit up 36.1 percent at Rs 102.2 crore.
  • Ebitda up 33 percent at Rs 195.9 crore.
  • Margin at 7.2 percent versus 6.6 percent.

Shree Digvijay Cement (Q1, YoY)

  • Revenue up 23.3 percent at Rs 117 crore.
  • Net profit at Rs 6 crore versus Rs 1.5 crore.
  • Ebitda at Rs 14.7 crore versus Rs 9.7 crore.
  • Margin at 12.6 percent versus 10.2 percent.

Omax Autos (Q1, YoY)

  • Revenue up 12.9 percent at Rs 277.1 crore.
  • Net profit at Rs 0.5 crore versus net loss at Rs 23.2 crore.
  • Ebitda at Rs 10.3 crore versus Ebitda loss at Rs 13.6 crore.

Hatsun Agro Product (Q1, YoY)

  • Revenue up 6 percent at Rs 1,235.7 crore.
  • Net profit up 7.7 percent at Rs 37.9 crore.
  • Ebitda up 18.9 percent at Rs 122.8 crore.
  • Margin at 9.9 percent versus 8.9 percent.

Sagar Cements (Q1, YoY)

  • Revenue up 6.2 percent at Rs 274.9 crore.
  • Net profit down at Rs 5.8 crore versus Rs 10 crore.
  • Ebitda down 14.4 percent at Rs 36.4 crore.
  • Margin at 13.2 percent versus 16.4 percent.

Who’s Meeting Whom

  • Mahindra Lifespace Developers to meet Deutsche Bank on July 20.

Offerings

  • TCNS IPO subscribed 2.01 times on second day of bidding.
  • Fosun is said to consider $500 million India IPO of Gland Pharma.

Insider Trades

  • Singer India promoter sold 22,500 shares from July 16-17.
  • Confidence Petroleum India promoters acquired 33,300 shares on July 18.
  • Shakti Pumps (India) promoter acquired 11,500 shares on July 18.
  • Axiscades Engineering Technologies promoters acquired 30,000 shares on July 16.

Trading Tweaks

  • GM Breweries, TV Vision and Dolat Investments placed under ASM framework.

Rupee

  • Rupee closed at an all-time low of 69.05 a dollar.

F&O Cues

  • Nifty July futures closed trading at 10,973.5, premium of 16.4 points versus a discount of 1.8 points.
  • July series: Nifty open interest down 2.5 percent; Bank Nifty open interest down 1.2 percent.
  • India VIX ended at 13.5, down 0.6 percent.
  • Max open interest for July series at 11,000 Call (open interest at 41.7 lakh, up 25 percent).
  • Max open interest for July series at 10,800 Put (open interest at 46.2 lakh, up 6 percent).

F&O Ban

  • In ban: Adani Enterprises, Adani Power

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.

Put Call Ratio

  • Nifty PCR at 1.63 versus 1.65
  • Nifty Bank PCR unchanged at 0.85

Fund Flows

All You Need To Know Going Into Trade On July 20

Brokerage Radar

IDBI Capital on DCB Bank

  • Initiated ‘Buy’ with a price target of Rs 210.
  • Balance sheet to double in next three years.
  • Bulk of branch expansion is behind; Operational leverage to kick-in from 2018-19.
  • Robust asset quality to support profitability.
  • Loan book and net profit to witness a compounded annual growth rate of 25 percent and 31 percent respectively in the next two years.
  • Premium valuation to sustain on improved fundamentals.

BofAML on Marico

  • Maintained ‘Buy’; raised price target to Rs 420 from Rs 390.
  • Copra prices on a likely cyclical downtrend.
  • Expect healthy earnings revival.
  • Positives: receding RM pressure, revival in rural demand & market share gains under GST.
  • Marico better placed among staple in terms of valuation.

Brokerages On Hindalco

Macquarie on Hindalco

  • Maintained ‘Outperform’ with a price target of Rs 305.
  • Aleris is a strategic fit for Novelis.
  • Deal valuation at 7.1-7.6 times EV/EBITDA CY19 estimate is similar to listed peers.
  • Aleris Ebitda to see sharp growth, valuations in line with peers.
  • Hindalco's balance sheet can easily digest the deal.

Kotak Securities

  • Maintained ‘Buy’ with a price target of Rs 300.
  • Bid for Aleris indicates preference to invest in the downstream business.
  • Aleris—a growth story, especially of auto-body sheets and aerospace products.
  • Aleris is loss making as large investments are yet to contribute to earnings.
  • Aleris well positioned to capture growth opportunities.

Brokerages On Kotak Mahindra Bank

CLSA

  • Maintained ‘Outperform’; raised price target to Rs 1,480 from Rs 1,360.
  • March quarter’s net profit was lower due to lower topline and higher provisions.
  • Slower loan repricing drags down NII growth to a multi-quarter low.
  • Asset quality is stable but watch out for unsecured lending.
  • Mixed performance of subsidiaries.

Credit Suisse

  • Maintained ‘Neutral’; raised price target to Rs 1,230 from Rs 1,070.
  • June quarter’s net profit miss on slower net interest income growth and treasury losses.
  • Loan growth remained healthy led by corporate loans.
  • Net interest margins remained under pressure as funding costs increased.
  • With healthy capital, growth is likely to remain strong.

Brokerages On Bajaj Finance

Goldman Sachs

  • Maintained ‘Buy’; raised price target to Rs 2,777 from Rs 2,548.
  • Net profit beat estimates on the back of expansion of margins and lower opex.
  • Strong momentum seen in business growth with continued traction in new client acquisition.
  • Well positioned to deliver sector leading growth and returns.
  • Expect 46 percent compounded annual growth rate in net profit over FY18-21 with best-in-class RoAs.

JPMorgan

  • Maintained ‘Overweight’ with a price target of Rs 2,800.
  • Solid earnings driven by loan growth and opex performance.
  • INDAS transition impacts earnings and book value growth.
  • Set to deliver another above 30 percent earnings growth for the year.
  • Remains top pick in the NBFC space.

Brokerages On RBL Bank

Morgan Stanley

  • Maintained ‘Equal-weight’ with a price target of Rs 500.
  • June quarter’s EPS growth broadly inline with estimate.
  • Continue to see strong growth and improving profitability.
  • Remain equal-weight owing to valuation.
  • Key risk is weak retail asset quality.

Kotak Securities

  • Maintained ‘Sell’; raised price target to Rs 475 from Rs 450.
  • Business in top gear; Trends maintained on all metrics.
  • Building a solid retail business but skewed towards unsecured business.
  • Business growth has tailwinds even as we see headwinds to valuation.
  • Marginally revised estimates for FY19-21 reflecting better loan growth and NIM.